The announcement about All Aboard Florida has led to quite some confusion among rail fans and others watching the industry, mainly resolving around the question of why. After all, passenger rail operations, even when profitable, do not have a terribly high profit margin, and it's unlikely that it would earn back the one billion dollars that they've stated they plan to invest in it. Given that businesses do not tend to be altruistic, what gives?
A clue lies in the initial press release itself. While it would run on Florida East Coast Railway track, the announcement was made by their holding company Florida East Coast Industries which describes itself as a major real-estate owner and developer in the state of Florida. Looking into their holdings, we find one very prominent eight acre parcel in downtown Miami that is especially interesting. This used to actually be the location of the FEC Miami station and skirting the northern edge of the property there remains a single tracked FEC line. It also currently possesses an entitlement for up to 2.5 million square feet of mixed use development.
While this area is certainly valuable enough as is, both due to its inherent location as well as its proximity to Metrorail and Metromover stations, the addition of easily accessible intercity rail connections to the rest of the state greatly boosts that value, especially if developed with an eye towards the tourist trade. Of course, the increase in value to this location does not mean that it will come anywhere near completely recouping the investment costs of All Aboard Florida. Additionally, I was unable to identify additional properties in cities to be served by All Aboard Florida whose value would be similarly enhanced. However, I believe that using passenger rail service to enhance real estate values and incomes, the original purpose of the Florida East Coast Railway in fact, is a significant contributory reason for the All Aboard Florida announcement.