Sizing up the Second Avenue subway bump: Q&A, Part III
From the January issue: Barring any unforeseen catastrophe, the Upper East Side should have a new subway line in 2017. As of late last month, the $4.4 billion project — which has been nearly a century in the making — was set to open on New Year’s Day. “If we’re not done January 1, I will stand up and say we failed to make the deadline, and I’m disappointed,” said Gov. Andrew Cuomo, who personally visited the new stations and oversaw details. But whether construction crews actually make that deadline or not, the new transit line is already being factored into the UES market, according to experts. Brokers are already seeing price hikes on condos, and developer Ben Shaoul, who earlier this year launched sales at 389 East 89th Street, told The Real Deal that he is shopping for more sites in the neighborhood. For our third and final web installment of the Q&A, we turn to Stephen Glascock of Anbau, Steve Maschi of Glenwood, and Teri Noren of Bond.
Founder and president, Anbau
How big an impact will the Second Avenue subway have on the UES market in general?
Due to its lack of public transportation, Second Avenue hasn’t historically been the most popular part of town. Now, with the opening of the Second Avenue Subway, nearby restaurants and retail purveyors are coming back to life. Yorkville is one of Manhattan’s best-kept secrets, and the lack of nearby transportation has preserved its authenticity. The new subway will add convenience for those who value the charm of the neighborhood yet want to access different parts of the city, especially the West Side. I’d describe Yorkville as the Upper East Side with a bit of East Village thrown in, and now it will have the first new subway in 100 years, making it an even more attractive place to live.
Are we seeing a demographic shift in the neighborhood? What kind of buyers are you seeing?
We are primarily seeing young professionals starting families and empty nesters moving to the Upper East Side, as well as people who want the prestige of an Upper East Side address and the schools. Interestingly, we’ve noticed many people moving from Tribeca and Brooklyn Heights, people who need to reverse-commute to suburbs north of Manhattan and people who want quick access to the Hamptons.
How are sales going at Citizen360?
Anbau launched sales for our new luxury condominium Citizen360 earlier this year. The property offers 84 one- to four-bedroom residences in Yorkville. Exteriors have been designed by SHoP Architects to reflect the surrounding streetscape, with remarkable attention to detail. People who value the SHoP Architects design and Clodagh interiors combined with the convenience of the neighborhood have been especially attracted to the project.
Vice president, Glenwood Management
You own 11 rental properties on the Upper East Side. How much has the lack of transportation affected the Yorkville rental market over the years?
We have been dealing with not having the subway here since the company started. I’ve been here for 30 years and we’re accustomed to Not Having The Second Avenue Subway, so what’s frustrating is not so much the wait but the disruption the construction has caused in the neighborhood while waiting for it to be completed. It caused traffic problems, and retailers are having problems. Our York Avenue properties provide shuttle transport to the subway for tenants, but now they have another choice. We will likely continue to provide shuttles. Just having another transportation option makes the neighborhood a little more desirable.
Where are rents going?
Rents are cyclical. During the course of a year rents go up and down; typically this time of year rents get a little softer, that’s normal. Spring and summer they go up a bit, in fall and winter they go down a bit. That cycle repeats itself, but in the long term rents are going up. So if you take the long view, over the 30 years I’ve been here I anticipate they will continue to rise. Of course, not always straight-line.
How has the long wait for the Second Avenue Subway affected prices on Second Avenue?
The long wait depressed prices and rents for a while. There has been a huge change in prices from three years ago to now because people didn’t want to live with construction. Now you don’t hear it that often because certain phases are complete, and, as a result, prices have increased. What you can get for a one-bedroom now, you could have gotten a three-bedroom three years ago. Even though buyers see the mess, they know the subway is coming. I tell them that once the subway is built, the prices will go even higher.
How much are prices going up?
An apartment I sold a year ago for $750,000 is now $830,000. I think prices aren’t going to go up that much more, because interest rates are starting to rise. They’ll need more money to buy the same property. Sellers are starting to hear that, and there’s not that much more wiggle room to go up. Let’s see what happens once Trump takes over. I’ve been telling my clients to buy now so as to lock in this interest rate.
What sorts of buyers are you seeing coming into the neighborhood?
I’ve been getting young families and foreign investors, mostly from China. One couple asked me to take them to the new Second Avenue Subway because they wanted to see the entrance. They were very interested in that East 86th Street entrance. It gives investors an opportunity to buy something if they want to be on the UES at some point down the line. The UES still has the cachet of wealth and accomplishment. Schools are good there. I’m seeing families with young kids who want to be there and want to mingle with other young families. Once the subway comes in, there will also be more retirees coming in from the suburbs.
Will Yorkville remain a relative bargain?
Yorkville is still cheaper than lots of places in Brooklyn. I had a couple looking at Park Slope, and the initial prices there have been higher than things in Yorkville — although maintenance is still less in some areas of Brooklyn. I would say families who want a three-bedroom apartment can get one for under $1.5 million, where they couldn’t get that anywhere else in Manhattan. The area is still not as fancy as other parts below 79th Street, but it has a very relaxing vibe. Nobody gets angry if you don’t look proper when you live in Yorkville. You don’t have to play that “Upper East Side role.” The relative bargains are in the 80s and 90s east of Lexington.