A Dallas Area Rapid Transit train. Bloomberg News

Transit agencies in the U.S. looking to expand rail lines are getting into the real-estate-development business to raise revenue.

In Atlanta, the regional transit agency is considering three possible expansion plans for its rail line, which opened in 1979 and services more than 100 miles of track. But the Metropolitan Atlanta Rapid Transit Authority has struggled because revenue from a county sales tax that provides a large portion of the system's funding dropped during the recession and has increased slowly since then.

The authority is targeting underutilized parking lots near train stations for mixed-use development. It is negotiating leases for three parcels with developers who are planning to add more than 1,400 residential units and about 50,000 square feet of retail space.

Atlanta has company. Cash-strapped public transit systems in other cities such as Washington and San Francisco have moved to take advantage of the rise in values of property near train stations.

According to a study released by industry group American Public Transportation Association in 2013, property values within walking distance of public transit stations were 40% higher than other properties in the same region.

"It is just so logical and yet only now, over the last five to 10 years, have we seen this happen," said Christopher Leinberger, a senior fellow at the Brookings Institution who focuses on land use. "By their very nature, rail systems are unprofitable. Now that we have a shortfall in funding, we have to get creative."

The move by transit agencies comes as numerous passenger rail systems have expanded in recent years. Passenger railways covered more than 10,300 miles in 2012, compared with 8,864 miles in 2000, according to the National Transit Database. Railway systems in cities such as Dallas, Denver and Washington are leading this growth.

Rail ridership is also increasing, up to 4.8 billion in 2013 from 3.4 billion a decade earlier. Passenger rail lines are becoming more popular as more people opt for downtown living where they are less dependent on cars.

"People want to live around their station," said Art Guzzetti, vice president of policy for the American Public Transportation Association. "People want to have their commerce around their station. The highest and best use of that property is to have development around it."

Transit agencies have been slow to appreciate this, said Mr. Guzzetti. "It's not what maybe the typical transit authority of today is established to do," he said.

That is changing, he said. "There's a common understanding that real estate is the next big thing in public transportation. I think there's an understanding that it goes together."

Transit agencies in San Francisco, Denver and Dallas have launched transit-oriented development initiatives over the years.

Some sell and lease land, while others, such as Dallas's transit authority, work to encourage private developers to build mixed-use projects around its stations. The Dallas transit agency also occasionally swaps land with developers.

In Atlanta, a mixed-use project at Lindbergh Center station was developed by Carter, a builder in the region. The project has about 600 residential units, a million square feet of office space and 100,000 square feet of retail space. Carter Vice Chairman Jim Shelton estimates office and retail space are over 90% leased.

In 2013, the Atlanta transit agency received nearly $7 million from leases, its fifth-largest source of revenue. That figure will likely increase as the agency moves forward with plans for mixed-use development at 10 other stations, said Amanda Rhein, senior director of the agency's transit-oriented development division.

Ms. Rhein said the Metropolitan Atlanta Rapid Transit Authority opted for long-term leases, rather than land sales, because it needs a revenue stream more than a large sum of money at once.

Some transit authorities have been slow to focus on development because they don't have a real-estate staff, said Mr. Leinberger of Brookings.

"They're not just a government agency, but they're a government agency dominated by transit engineers," he said. "They understand how to operate a rail system, there's just no experience in reaping the benefits in the transit system."

Mr. Leinberger expects agencies in the U.S. to ramp up real-estate efforts, which he estimates could eventually pay for a third of rail-system costs.

"Now that the market has provided such huge price premiums for walkable urban development, much of which is rail-transit-served, now we can take advantage of that to help pay for these expansions," he said.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com