If all goes according to plan, the official opening for the Second Ave. Subway will be in 35 months. Of course, knowing the project’s multi-decade history and the MTA’s penchant for delivering on time, that date is far from set in stone, but already, the subway is affecting the Upper East Side real estate picture. If the latest news is a preview of things to come, we’ll soon see that a subway through a developed and previously up-zoned neighborhood can still drive the market.
The story that broke last week involves a property on East 66th St. near Third Ave. It is, in other words, only a few blocks away from the new entrance to the Second Ave. Subway and F train that will open at 63rd and 3rd. Adrianne Pasquarelli had the story in Crain’s New York:
The increasing popularity of northern Third Avenue has led to the sale of a building on the corner of East 66th Street. Chicago-based real estate investment firm L3 Capital recently sold a four-story, 5,300-square-foot property at 1128 Third Ave. for $9.5 million to a local investor. L3 purchased the building about three years ago for around $6 million, according to Adelaide Polsinelli, the Eastern Consolidated senior director who negotiated the sale on the firm’s behalf.
She attributes the 58% jump in price in part to the forthcoming upgrade in the neighborhood’s transit options with the arrival of the Second Avenue Subway. “There is activity percolating in the area,” said Ms. Polsinelli. “The Second Avenue Subway definitely has impacted this in a positive way.”
The history of New York is, of course, replete with examples of transit spurring on economic development and creating more desirable places to live. Without the the subways, jobs wouldn’t be as concentrated in Manhattan as they are, and the city wouldn’t be nearly as dense or as big. We’ve seen the famous photos of the subway snaking through farmland in Queens shortly after construction on the Flushing line wrapped, and we’ve seen a marked increase in development activity near the spot of the 7 line’s new 34th St. on the Far West Side.
Now, we’ve received another reminder of the power of transit. People want it, and it drives up the desirability of real estate. Plus, developers and building owners are tuned in, and as the completion of Phase 1 of the Second Ave. Subway inches closer, we’re likely to see buildings change hands and retail rents on the Upper East increase. It’s hard to over-stress how much more convenient everything east of 2nd Ave. will become when the subway opens.
The key going forward for New York is to capture some of that value and help turn it into additional transit upgrades. Tax financing will help offset some of the costs of the 7 line construction (though considerable tax breaks given to developers will eat into that money), and the same should be done both north for Phase 2 and south for Phases 3 and 4 of the Second Ave. Subway. Perhaps, too, such an approach could work in areas of Queens and Brooklyn that are ready and willing to embrace subway expansion.
It’s easy to lose sight of the way transit has pushed New York’s development throughout the ages, and those who forget history do not stand to gain from it. We have a modern-day reminder of the power of transit. At a time when future expansion efforts are in doubt, the city, the state and the MTA should harness that economic drive to promote further growth.