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New York’s Second Avenue Subway is Open! What Does This Mean for Renters?

I may not live in New York City, but I’m still a New Yorker at heart and that means that I fully understand how vital the New York subway system is to both its residents and its visitors. It transports nearly six million people every single day! It was no surprise that New Yorkers cheered for joy when the mythical Second Avenue Subway finally came to life on New Year’s Day. But will this long awaited track lead to a major increase in rent?

 

The saga of the Second Avenue Subway actually began in the 1920’s but once the Depression hit, the idea was tabled until the 50’s. It didn’t work out then either because city planner Robert Moses spent the money on expressways instead. Not a bad choice but there was simply no funds left over to expand the Subway system in this way. The plan continued to resurrect but fall through several times including 1968, 1975, and the 1990’s. Finally, in 2004, an actual plan was approved to build phase one including three stations between 72nd and 96th Street. Estimated cost: $3.8 billion. Estimated completion: 2013 …

 

New Yorkers became wary that the plan would fall through yet again once the deadline was pushed to 2015 and the plan’s cost continued to rise. But it all came to life this past weekend on New Year’s Eve.

 

Phase one of the Second Avenue Subway started its runs on New Year’s Day. Three stations and two miles of track totaling $4.5 billion will help countless commuters shave time off of their morning and evening routes and help ease the very uncomfortable overcrowding that the East Side line is so known for. Local businesses are also expecting a bit of a boom, as many places will be much easier to reach.  There are clearly a lot of realized and anticipated benefits of the new line, but many rents fear that their rent will skyrocket and quite possibly push them out of the city.

 

According to the New York Times, “People living near three new stations at 72nd, 86th and 96th Streets could face rent increases as high as $462 per month.”

 

That is a steep increase, especially for the millennials and the older population who live off of limited budgets.

 

Because it is so new, the full economic impact of the new subway line is unclear. But residents and businesses alike are preparing for steep increases in their monthly rent. If the rates rise as much as predicted (for some store fronts, it could potentially be thousands of dollars per month), many say they will need to move out of the city and/or close down shop.

 

On the other hand, many businesses – specifically restaurants and retail shops, are thrilled at the likelihood of more foot traffic. Construction on the Second Avenue subway began 10 years ago in 2007 and a lot of consuners avoided the area because of it.

 

The fact of the matter is that regardless of location, easy access to good public transportation leads to higher prices in real estate. New York City tends to be especially susceptible to this trend because access to the subway is one of the top factors residents consider when looking for a home to buy or to rent.

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MIKE CANNING
VP, Client Services

RICK CALANNI
VP of Business Development Northeast Region

 

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