There’s a unique sense of relief when a subway train that’s “being held momentarily” finally starts rolling forward.
And it was with a similar rush of comfort that Brooklyn real estate players welcomed the news Thursday that the L train shutdown won’t be as bad as originally thought.
“Even with all the planning and the additional ferry service and additional bus service, it would have been very challenging for the 200,000 plus commuters,” said Toby Moskovits, president and founder of the real estate investment firm Heritage Equity Partners. “I think this is a great win.”
When the Metropolitan Transit Authority announced in 2016 that it would need to fully close the tunnel carrying the L train under the East River for more than a year, anxiety about how this would impact real estate — particularly residential rents — pervaded.
So it came as a welcome relief to real estate players on Thursday, when Gov. Andrew Cuomo unveiled a new plan under which work on the tunnel would only be done nights and weekends. The tunnel was due to close in April prior to his announcement.
Many in the world of Brooklyn real estate portrayed this as a disaster averted, even as questions remained about the plan’s specifics and why it was announced so late in the process. While the neighborhoods along the L train may still see some lingering side effects given how long news of a total shutdown was publicized, landlords expect to see rental prices and demand both start rising sooner rather than later.
Moskovits’ firm is currently working with Rubenstein Partners on a major mixed-use project at 25 Kent Avenue in Williamsburg that will span about 500,000 square feet. Her team had previously downplayed the impact of the L train shutdown, arguing that fixing the tunnel could actually bring more confidence to the market.
Although it is difficult to quantify how big of an impact the L train shutdown had on real estate in Williamsburg, multiple industry sources said they saw demand soften in the market when it still looked like a complete closure was the plan.
A StreetEasy study from December found that demand for rentals in Williamsburg was the only neighborhood in the city to see a decline in rental demand, with a 1 percent drop since October 2017. And an analysis from The Real Deal at the end of 2017 found that the pending shutdown had virtually ground retail leasing activity in the neighborhood to a halt.
These trends are likely to reverse now that the L train will stay at least partially open, according to MNS founder and CEO Andrew Barrocas.
“I would say 80 to 90 percent of the slowdown [in leasing] was attributed to the L train in Williamsburg specifically, so I think we’re going to see an increase in pricing,” he said. “We’re going to be coming into the spring months. We had put on certain concessions to get through the L train closure. We’re now going to take them off.”
Residents along the L train can still expect to deal with more inconveniences than usual, as the tunnel will still be closed on nights and weekends, but this will not be nearly as problematic as a full shutdown, Barrocas said.
“People’s main concerns were ‘How do I get to school? How do I get to work Monday through Friday?’” he said. “I never heard one person say, ‘How am I going to get to dinner on Saturday night or a show?’”
And locals have other options to get into Manhattan, like ride-sharing services and the ferry.
Jonathan Miller, CEO of the appraisal firm Miller Samuel, echoed this point, noting that having trouble getting from Williamsburg to Manhattan on nights and weekends pales in comparison to not being able to get there at all.
“It’s not as if it eliminates everything negative about this,” he said of the new plan, “but I think the heavy short-term damage was related to having zero service for 14 months or so.”
The long-term benefits of fixing the tunnel will also be helpful to the neighborhoods along the L train, according to Miller.
“The whole purpose of this is to create a more reliable commuter system, transportation system,” he said, “so that in and of itself has quite a benefit to the neighborhood far into the future.”
Tim King, managing partner at CPEX Real Estate, said the fallout from two years of hand-wringing over the shutdown won’t just disappear, but stressed that its overall impact would still be much lower.
“It’s maybe too little too late because I think it’s already had some significant impact,” King said, “but clearly this is a quality of life issue for the folks who live there, and for those folks who were panicking that the sky was falling and rents were falling, this is going to put the brakes on that.”