Second Avenue Subway

The plan to rezone Midtown East has returned, and so too have these renderings of Grand Central.

In the waning days of the Bloomberg Administration, the ambitious plan to rezone Midtown East died an expected death. The lame-duck mayor wanted to push through his vision for a modern, revitalized and taller Midtown, but the City Council and various stakeholders were more interested in both not rushing and waiting out the next administration. Now, the Midtown East rezoning plan is back on the table, and with it, the call for transit improvements have returned as well.

The rezoning plan itself returned on a Friday a few weeks ago with little fanfare, mostly due to the timeline. Mayor Bill de Blasio has elongated the timeline, and while some work around Grand Central can begin soon, the full rezoning effort likely won’t wrap until mid-2016. Whether it needs to take that long is a question ripe for debate, but this is certainly the polar opposite of Bloomberg’s attempt to push through rezoning in three months.

The MTA, meanwhile, wants to be front and center during the discussion, and the longer timeline should benefit them. Andy Hawkins of Crain’s New York explored the agency’s view in a piece this week. He writes:

The Metropolitan Transportation Authority is eyeing big changes to subway stations within the footprint of the proposed midtown east rezoning, and will need a trainload of cash to make it happen…MTA Chairman and CEO Thomas Prendergast said improvements would be needed at Grand Central Terminal, including the Lexington Avenue line and the shuttle to Times Square, and the E and F train station at 53rd Street and 5th Avenue, in order to accommodate more office workers that will come after the rezoning.

At Grand Central, new staircases linking the mezzanine where the turnstiles are to the ground-level station are under consideration, as well as improved pedestrian paths and sight lines to get straphangers from the platform to the mezzanine more quickly, an MTA spokesman said. Currently the station’s signal system allows for 29 trains to pass through every hour, but because of congestion typically only 26 to 27 trains make it through. Relieving that congestion would allow 4,000 to 6,000 more passengers per hour to move through the station.

In the past, Mr. Prendergast said, the development process has forced the MTA to be reactive to new construction, making transit upgrades only after large buildings have been built. “We didn’t do as good a job—we collectively, the city and the MTA—of making sure we identified those and dealt with them,” he said. But midtown east has been different. The MTA has had “a fairly long dialogue” with the City Planning Commission and the Department of Transportation about its funding needs for the rezoning. Those needs will likely be reflected in the MTA’s next capital budget, which is due in September.

When Midtown East first entered our collective consciousness, the MTA estimated its needs at around $465 million. It will update those numbers in the fall, and odds are the price tags have increased. Some of the funding could come from the planned sale of the MTA’s headquarters at 347 Madison Ave. and the transfer of the air rights exist above that rather diminutive building.

Still missing from the MTA’s wishlist for Midtown East though are future phases of the Second Ave. Subway. It’s not the easiest sell because these phases are years away from construction, let alone completion, but it’s possible to argue that nothing is more important to a successful rezoning effort, especially east of Grand Central, than a full-length Second Ave. Subway. Despite these planned renovations along the East Side IRT, the 4, 5 and 6 can’t really handle that many more daily riders, and the Lexington Ave. line doesn’t do the same job of redistributing commuters along the East Side as the Broadway and 6th, 7th and 8th Ave. lines do through Midtown West.

I’m not going to hold my breath here. The MTA is angling for incremental improvements to existing infrastructure — which it needs — but the future for SAS seems up in the air. I’ve heard rumblings that the MTA will soon look to refresh the Environmental Impact Statement for Phase 2, but Midtown East implicates Phases 3 and 4. Will we see those in our lifetimes? Your guess is as good as mine.

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.

Phase 1 of the Second Ave. Subway will open in 2016 and is already spurring on Upper East Side real estate deals.

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.

One day, this will be the northern end of the Q train at 96th Street and Second Avenue. Photo: Metropolitan Transportation Authority / Patrick Cashin

When last I had the opportunity to venture underground at Second Ave., in April of 2011, the future subway looked something like this. ADI, the tunnel boring machine, had completed her runs, but with December 2016 at the time over five years away, a new subway line was only vaguely taking shape.

Fast forward to today, and while we still have 38 months to go, it’s beginning to look a lot like New York’s own underground version of the impossible dream will come true. The MTA yesterday released a brand new set of images from the construction zone, and the progress is significant. Atop this post is an image from 96th St. — nearly the same view as the one I snapped two and a half years ago — and you can now see a station platform and track bed clearly taking shape. (Here is another view.)

Things are looking a bit rougher around the edges at 86th St., but you can see waterproofing well under way and track beds taking shape. Notice the difference in design too between the Second Ave. Subway and our standard-issue early-to-mid 20th century tunnels: With two deep-bore tubes, passing trains will see each other only in stations.

For more on the world underneath the city, browse over to this Vanity Fair long read. MTA Capital Construction President Michael Horodniceanu loves himself the Second Ave. Subway, but East Side Access, unsurprisingly, gets more muted praise from those involved.