Second Avenue Subway’s Arrival Brings Fear That Rents Will Soar

Second Avenue Subway’s Arrival Brings Fear That Rents Will Soar

- in Real Estate

While the new line will shorten her trip to work, she worries that it could also bring a major rent increase and ultimately push her out of Manhattan.

“If it was over $200, that would be tough,” she said. “We’d have to consider moving.”

Once a German enclave where elevated trains ran above Second and Third Avenues, the Yorkville neighborhood on the Upper East Side is now home to millennials looking for a deal, families drawn by good schools and older people with limited budgets. Rowdy bars with beer pong games exist alongside hordes of strollers. On its eastern border sits the verdant but out-of-the way Carl Schurz Park and Gracie Mansion, the mayoral estate, whose current resident, Bill de Blasio, prefers to use chauffeured cars over the far-flung subway.

The elevated lines were razed in the 1940s and 1950s, to the delight of many residents who viewed them as noisy eyesores and expected a new subway line to open soon. Instead, the area became a rapid-transit desert, one of the few neighborhoods in Manhattan that the subway did not reach.

Peter Psirakis, who repairs shoes, worried that his rent would soar with the completion of the subway line, possibly forcing him out of business.

Dave Sanders for The New York Times

But this has also made the neighborhood relatively affordable by Manhattan standards. Yorkville’s median rent is about $2,700 per month, lower than Manhattan’s rate of about $3,300, according to StreetEasy, and there are clusters of rent-stabilized and rent-controlled apartments.

A real estate wave seemed forever around the corner as plans for the subway line were delayed again and again. Until now, residents have been forced to trek blocks to the nearest packed subway stops to board No.4, 5 and 6 trains on Lexington Avenue, the nation’s most-crowded subway line.

The first phase of the new line, which cost about $4.4 billion, is opening at a critical moment, with subway ridership reaching its highest level since 1948. The flood of riders has led to uncomfortable crowding and increasing train delays, while people who choose to drive or take the bus face intensifying gridlock.

Since the subway first opened in Manhattan in 1904 and expanded farther into the Bronx, Brooklyn and Queens, it has paved the way for development, and it propelled the city’s soaring population in the first half of the 20th century. But in recent decades, the system has largely remained the same size, even as the city’s population of 8.5 million is the highest ever and continues to climb.

The city’s first new subway station in a quarter-century opened at Hudson Yards on the Far West Side of Manhattan in 2015, but that was only one stop and the formerly industrial neighborhood was largely a blank slate for developers. The Second Avenue line is a different story, traversing an already dense neighborhood, and the full economic impact is not yet clear.

Local businesses are bracing for steep rent increases. Peter Psirakis, the owner of a shoe repair shop on Second Avenue near 70th Street, worries that his rent each month, now more than $6,000, could rise by thousands of dollars. He would likely have to shut his store when his lease ended in a couple of years.

“I’m here 23 years,” he said. “I can’t go to another neighborhood and start a business from the beginning.”

Dave Goodside, owner of the Beach Cafe, under a blast-warning sign from construction of the subway line. Staying afloat during the prolonged construction period was a challenge.

Dave Sanders for The New York Times

At the same time, though, many restaurants and shops are also eagerly anticipating the return of foot traffic; many people avoided the area when construction of the subway line began in 2007. Tunnel blasting rattled buildings, broke windows and produced noise and dust. Local business leaders held a news conference recently on Second Avenue with Representative Carolyn B. Maloney, a Democrat who represents the area and is a longtime supporter of the project, to praise the anticipated economic stimulus.

Even before the first train rolls, the area’s housing market has been heating up. New condos have risen on First and Second Avenues, with sales topping $2 million for a two-bedroom apartment. In the last five years, median rents near Second Avenue have grown by 27 percent to about $2,520 per month, according to StreetEasy. Many of the same concerns over gentrification could arise as the line is ultimately extended uptown to 125th Street in East Harlem.

“Displacement is a real concern,” said Thomas K. Wright, the president of the Regional Plan Association, an urban policy group. “When you increase the values in areas like this, you need to do things to protect affordable housing and retail.” He said officials should consider a host of policies to keep the neighborhood within reach, including securing affordable housing as part of any zoning changes.

A lifelong resident of the neighborhood, Carol McCabe moved to Knickerbocker Plaza on Second Avenue in 1975. Ms. McCabe, 67, who runs a senior center in the complex, is struggling to pay her rising rent of about $3,000 per month after her husband died, and might eventually have to leave New York.

“I’m not so certain about the future,” she said. “I’m worried about my apartment.”

Even Yorkville’s city councilman, Ben Kallos, 35, who grew up in the neighborhood, is weighing how he and his wife can afford to stay in the district. He said there was little he could do to slow rising rents.

“Where I have to place much of my focus is on helping rent-regulated tenants stay in their apartment and exercise their rights,” said Mr. Kallos, a Democrat who has also pushed to set a height limit on so-called superscrapers in the neighborhoods he represents.

Austin Finan, a spokesman for Mr. de Blasio, a Democrat, said the administration’s top priority remained protecting affordable housing and building new units.

Workers on Second Avenue between East 69th and East 70th Streets, completing work on the 72nd Street station.

Dave Sanders for The New York Times

“We pursue that goal in every neighborhood in the city, including on the Upper East Side,” Mr. Finan said.

Across the United States, good transit access often leads to higher real estate prices, with home values near rapid transit in Boston, Chicago, Minneapolis-St. Paul, Phoenix and San Francisco far outpacing other properties during the last recession, according to a report by the American Public Transportation Association.

But New York City is a special case, where proximity to the subway is perhaps the most important factor for renters and buyers. Just look at the recent panic in trendy Williamsburg, Brooklyn, over the impending shutdown of the L line for more than a year.

Still, the Upper East Side is unlikely to become suddenly hip, said Mitchell L. Moss, director of the Rudin Center for Transportation Policy and Management at New York University.

“The neighborhood is intrinsically boring,” Mr. Moss said. “People don’t live there for excitement. They live there for stability.”

Some predict an influx of high-end shops and more chain stores, even as shuttered storefronts along Second Avenue highlight the places that closed rather than wait out the disruptive construction.

Dave Goodside kept the Beach Cafe restaurant open, borrowing money, laying off employees and sometimes working nonstop to remain afloat. A sign in the dining room is a reminder of the tumultuous construction era: “One long whistle: Preparing to blast.”

Mr. Goodside expects his rent will soon rise sharply.

“What we talk about all the time,” he said, “is how we can increase business and be ready for that day.”

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