A nationwide expansion of Amtrak and commuter rail service is set to receive a major influx of federal funds meant to modernize passenger train travel, a move that's expected to trigger commercial and residential development in neighborhoods where new stations are built.

About $11.3 billion in federal funds are available this year from the Federal Railroad Administration, the first time the agency has had a grant program for passenger rail that renews on a yearly basis. The funding was approved in 2021 through the $1.2 trillion infrastructure law, which also targets roads, bridges and electric vehicle charging stations.

A windfall of real estate projects nationwide could emerge as a result, creating potential foot traffic for nearby businesses and demand for commercial property in surrounding areas. Already, new rail stations built in Raleigh, North Carolina, and Sacramento, California, have helped kick off development momentum near the transportation hubs.

"This is the moment we've been waiting for," U.S. Rep. Matt Cartwright, D-Pa, told the Scranton Times-Tribune. He supports extending Amtrak service from New York to Scranton, Pennsylvania, and NJ Transit rail service to Hoboken, New Jersey.

"We're about to find out if years of hard work and preparation are going to pay off," he said.

Cities that now lack passenger rail service, including Scranton; Baton Rouge, Louisiana; and Columbus, Ohio, could be getting new service from federally owned Amtrak or state and local-owned regional systems, according to industry professionals. Hundreds of acres of commercial property are expected to be acquired for new stations, rights-of-way and staging yards.

Projects considered most likely to win grants, according to industry professionals, are located in New York, Pennsylvania, Louisiana, Minnesota and California. But no regional agency has yet submitted an application, according to a Federal Railroad Administration spokesman. The deadlines are in March.

It's not a slam-dunk that projects awarded the new federal grants will be completed. Republican lawmakers in Wisconsin have said they will reject the use of state funds for an Amtrak connection between Madison and Milwaukee. A state or local financial commitment is required for a project to be eligible for federal grants.

"I don’t think it makes sense to build a rail, even if it’s mostly through federal money, if we're stuck on the hook subsidizing it for the next 30 years," Wisconsin state Sen. Devin LeMahieu, a Republican from Sheboygan, told the Associated Press last month.

The Federal Railroad Administration plans to award grants each year through 2027 for passenger rail revival projects. The grants are available to both Amtrak and regional transportation authorities like Chicago's Metra commuter rail and New York's Long Island Rail Road. Projects must have finalized at least 20% of funding from local or state sources to be considered for the federal grants.

Projects to upgrade and expand passenger rail service along the Northeast Corridor, which runs from Washington, D.C., to Boston and is Amtrak’s busiest area of the country, have access to nearly $9 billion in new federal grants this year. States, cities and other transportation authorities must apply by March 27. For projects outside the Northeast Corridor, nearly $2.3 billion is available. The application deadline for those projects is March 7.

Projects that have already started construction or that have existing agreements for local funding are most likely to win the federal grants, said Rich Sampson, executive director of the South West Transit Association in Fort Worth, Texas, a trade group for municipal bus and transit systems serving eight states.

“Political will by statewide elected officials, strong support in the state legislature and backing from local officials” will all likely be taken into consideration when awarding grants, Sampson told CoStar News. Sampson is not involved with the new grant program but has direct knowledge of potential projects.

Projects in Louisiana, Minnesota and Pennsylvania are likely near the front of the line to win the federal grants, Sampson said. Those projects include extending Amtrak service from New Orleans to Baton Rouge, estimated between $250 million and $300 million. The project would require construction of new train stations in Baton Rouge and Louis Armstrong New Orleans International Airport, where train tracks are already located.

Another front-runner is a high-speed line between Minneapolis and Duluth, Minnesota; and a connection from New York Penn Station to Scranton, Sampson said. Scranton lost Amtrak service in 1970.

Some major construction projects along the Northeast Corridor have already begun. Construction is underway on the first of two phases of the $1.8 billion Portal Bridge in the New Jersey Meadowlands. But the second span has not secured funding, Brian Fritsch, a spokesman for the transportation advocacy group Regional Plan Association, told CoStar News.

Workers have also started work on temporary repairs to the North River Tunnels that connect New Jersey and New York. The states have proposed $16 billion in construction of new tunnels under the Hudson River, but it hasn’t received full funding.

Two other projects in the Northeast Corridor considered major bottlenecks for Amtrak and other commuter rail networks could also receive funding: the $6 billion replacement of the B&P Tunnel in Baltimore and the $1 billion replacement of the Norwalk River Bridge in Norwalk, Connecticut.

While many projects across the country have the support of local officials, others may face opposition.

Several Ohio cities support a proposed Amtrak route linking Cincinnati, Dayton, Columbus and Cleveland. The Ohio state capital of Columbus is one of the largest U.S. cities without Amtrak service. The proposal is estimated to cost between $100 million and $130 million, according to the Dayton Daily News.

But Republican Ohio Gov. Mike DeWine has not yet voiced full support for the proposed Amtrak line, according to the Cleveland Plain Dealer. Former Ohio Republican Gov. John Kasich in 2010 rejected federal money for Amtrak expansion.

DeWine's office couldn't be reached to comment.

Other major proposed passenger rail projects in the U.S. could be left out of the federal grant program. 

Construction has begun on a high-speed rail line connecting Los Angeles and San Francisco, but because the $113 billion program is so massive, federal officials will probably take a wait-and-see approach before committing money, said Sampson with the South West Transit Association.

High-speed passenger rail has also been proposed to connect Houston and Dallas, but the project has not advanced much beyond the discussion stage, Sampson said, which makes it unlikely to win funds from the Federal Railroad Administration.