Commercial Real Estate: Second Ave. Subway contributes to area growth by Fitzsimmons

Justin Fitzsimmons, GFI Realty Services

If the city’s New Year’s resolution was to start meeting deadlines, they’re on the right track.

As expected, the Second Ave. Subway, which extends the Q train from 63^rd St. to 96^th St., started rolling on January 1^st, adding three stops along Second Ave. – at  East 72^nd, East 86^th, and East 96^th Sts.

Construction on the new train line began 10 years ago and the 24/7 subway construction initially affected the Upper East Side and Yorkville real estate market negatively. While pricing around the city sky-rocketed in 2007, the area east of Second Ave. between 72^nd and 96^th Sts. remained an affordable option for many. Due to its lack of easy access to existing subway lines and overcrowded trains on Lexington Ave., pricing and neighborhood growth stayed conservative in comparison to other areas throughout Manhattan.

During the years of construction, sections of Second Ave. were closed for long periods of time while tunnels and stations were built. Unsurprisingly, retail took a substantial hit, and many businesses that did not to close their doors were left struggling.  However, retail owners that held out (and investors who got in early) should immediately begin reaping benefits, as the market is poised for a strong upswing due to increased accessibility throughout the neighborhood.

In regards to the residential market, the subway already began proving its worth a few years ago. In fact, over the last five years, residential pricing near Second Ave. has seen steady growth, outpacing most other neighborhoods of Manhattan. Additionally, investor confidence drove a good deal of construction, and new developments are hitting the market with higher prices than ever before.

The Second Ave. Subway is a textbook example of how real estate interfaces with public transportation, and investors would do well to refer to this saga when evaluating the potential of properties near transit in NYC and beyond.

Justin Fitzsimmons is a research analyst at GFI Realty Services, New York, N.Y.