When the Exeter Group purchased the Chittenden & Eastman Building for $1.65 million in October 2010, the former furniture warehouse might not have been considered a “hot” property.

The 137,000-square-foot structure, built in 1917 at 2410 University Ave. W. in St. Paul, was valued at $2.173 million in the midst of a pending foreclosure sale, according to the Ramsey County assessor’s office.

But St. Paul-based Exeter knew a light rail transit line would chug into the neighborhood four years later, connecting its future tenants to the downtowns of St. Paul and Minneapolis and the University of Minnesota.

Exeter invested $12.5 million in the building, converting it to 104 loft-style apartments just a short walk from the Raymond Avenue station. One of C&E Lofts’ main pitches to tenants is its proximity to the Green Line. As of January, Ramsey County assessed the property’s estimated market value at $11.435 million.

The C&E Lofts is but one example of how light rail projects can boost commercial property values. The Metropolitan Council has tallied $2.5 billion in private investment occurring within a half-mile of the stations on the Green Line in the last five years, though it is hard to pin down how much of it would have occurred without the transit project.

Even so, the 10-year-old Blue Line running between downtown Minneapolis and the Mall of America in Bloomington has been significantly slower than its new sibling to lure developers until recent years. Both LRT lines share five stations in downtown Minneapolis, where construction cranes are a common site near the stops.

Exeter also sees promise in downtown St. Paul, where it plans to redevelop the former Eugene McCarthy Post Office near the Union Depot, the terminus of the Green Line. Exeter hopes to start this fall on the conversion to a mixed-use project at 180 E. Kellogg Blvd., said Herbert Tousley IV, chief development manager and principal of Exeter.

Tousley said it would be difficult to estimate how much light rail increased the value of the C&E property because other factors contributed in moving the project forward. One was the availability of state and federal historic tax credits, which helped make the deal worthwhile for Exeter. (The site is in the University-Raymond Historic District.)

But, “in general, light rail transit does add value for commercial property owners,” said Tousley, who is the son of the University of St. Thomas’s director of real estate programs. One of the things commercial developers and property owners like about LRT versus other forms of public transit is that “it is permanent; they know it is going to be there for the long run,” he said.

Without the prospect of light rail, the C&E property “probably” would not have been as appealing, Tousley said. Even though the former industrial area is close to Highway 280 and Interstate 94, it was still slightly under-developed. “But there’s great opportunity there,” he said, “with light rail connecting that building and surrounding buildings to both downtowns and the University of Minnesota.”

Because the Green Line connects the downtowns of St. Paul and Minneapolis, it serves as a catalyst for real estate development in either central business district, Tousley noted. Developers are also looking at office opportunities in the CBDs, he said, citing United Properties’ development of a new $57 million headquarters for Be the Match, at 524 N. Fifth St. in Minneapolis’s North Loop. The project, which is on the former Shapco Printing site, is across the street from the Target Field Station.

As the LRT system expands its reach in the metro, it will continue to generate activity, Tousley said. “When we started here with one line, it was great to have something but it didn’t go a lot of places,” he said of the Blue Line.

With this year’s launch of the Green Line and its connections to the Blue Line, the Northstar commuter rail line and future Southwest LRT line, more opportunities should bring more value to more locations, he said.

Edward Goetz, director of the University of Minnesota’s Center for Urban and Regional Affairs, said connecting the Green Line to the Blue Line offers easy accessibility to LRT for more people and can take them to more parts of the metro area.

“It strikes me that accessibility improves with overall improvement of the transit system, so I think as more lines emerge, my guess is that the impact would — if anything — become stronger,” Goetz said.

A recent study by University of Minnesota researcher Jason Cao measured the impact of light rail on building activity along the St. Paul section of the Green Line.

Cao studied building permits during two key periods: from January 2007 through April 2011 and from May 2011 to January 2014. The first period launched after preliminary engineering of the line was announced, in December 2006, and the second came after the Federal Transit Administration confirmed full funding for the line, in April 2011.

Cao found that the preliminary engineering announcement had no impact on the number of building permits within a quarter-mile of the planned stations. The value of residential permits increased, while commercial permits declined, which is probably due to the recession, according to Cao. At that point, federal funding for the line had not yet been confirmed.

But when full funding was confirmed, there was a noticeable upswing in development activity through January 2014. Comparing the two periods, Cao found that building permits around stations increased by 29 percent and the value of those permits jumped 80 percent. That’s a “substantial” impact, said Cao, an associate professor in the Humphrey School of Public Affairs.

Bob Pounds, a senior vice president of capital development with the Minneapolis office of Colliers International, said that while some of the building activity along the Green and Blue lines might have occurred without the LRT system, he believes LRT is a catalyst for development and increased value.

Because of the urban nature of the lines, it is common to see real estate “repurposed,” which is a way of adding value, Pounds said. “It might be an old office building that is now going to be multifamily housing,” he said. “We’re going to see that kind of repurposing along University Avenue.”

Cities have density requirements for development along transit lines, which also helps increase value, Pounds pointed out. “If you’re going to build something new, it will have to have multiple floors,” he said. Cities “want everything pushed closer to the street and structured parking — all of that serves to improve values for the property nearby.”

Correction: The original version of this story incorrectly identified the employer of Bob Pounds. The story has been updated with the correct company name.