Second Ave. Real Estate Sagas: A price bump, 34 months out

Progress at Second Avenue Subway’s 72nd St. cavern as of January 21, 2014. Photo: MTA Capital Construction / Rehema Trimiew

After nearly a century of waiting, after multiple starts and stops, planning sessions and economic downturns, New York City’s very own Great White Buffalo is ostensibly 34 months away from its debut. While many long-time Manhattanites won’t believe until they ride a Q train to 96th St., the Second Ave. subway is closer to a reality today than it has been at any time its long and tortured history. If all goes according to plan, revenue service will start in December of 2016, and the real estate industry is starting to notice.

In a big story in this week’s issue of Crain’s New York, Joe Anuta went in depth on the impact of the subway and the future of sales and rents along Second Avenue. Although most business owners and residents have spent the past six years complaining about the explosions and dust, the noise and equipment that subway construction had wrought, those who own in the area are starting to reap the benefits while those who rent may draw the short straw. While brokers predicting a 300 percent increase in prices, the subway is making its impact felt.

Anuta reports:

All along Second Avenue on the Upper East Side, the picture is much the same. Property sales and prices have taken off in the past six months, and several new construction projects have been unveiled. In another sign of change, prices of condos along the avenue rose in 2013 for the first time in four years.

By all accounts, the reason is simple: Seven years after construction of a new Upper East Side subway line was restarted after a long lull, a mile-and-a-half-long stretch of the Second Avenue subway, running from East 96th to East 63rd streets, will finally open in less than three years, to the great relief of residents, some of whom have to trudge nearly a mile to ride the overburdened Lexington Avenue lines. “Can I use a corny expression here?” asked Barry Schneider, co-chair of Community Board 8’s Second Avenue Subway Task Force. “We see light at the end of the tunnel.”

…The seismic shift in commuting patterns looming in the area has caught the attention of, among others, one of the city’s most prolific landlords. Extell Development Co. first began assembling a series of properties along Third Avenue between East 94th and East 95th streets a decade ago, but only last month filed for permits to potentially tear down several of the buildings to build a tower that could top 150,000 square feet. Also in January, -Manhattan-based Anbau Enterprises filed to demolish three buildings between East 88th and East 89th streets along First Avenue, where it plans to build a SHoP Architects-designed, 150,000-square-foot project it bills as “affordable luxury,” slated for completion in 2016.

This is all well and good for those who bought and held on through the Great Recession and the construction process. They’ll stand to reap millions in sales and rents as demand for the area shoots through the roof, and the real estate industry could become a major player in forcing future phases of the Second Avenue Subway. They have the most to gain from increased property values up and down Manhattan and are uniquely positioned to pressure Albany, City Hall and the MTA. (More on that in tomorrow’s podcast.)

But there’s a story in between the lines here, and it involves the renters — businesses and residents — who have stuck it out throughout the six or seven years worth of construction. They’re going to escape the construction, but will they become victims a second time when the economic activity generated by the Second Ave. Subway pushes them out? It’s still too early to tell, and life won’t be wine and roses along Second Ave. over the next 34 months. Yet, while we can begin to see what the subway will do for the area, some people will win and some will lose. That story has yet to unfold.