Canceled L Train Shutdown Saved New Brooklyn Residents $26.5 Million
The dark clouds of Brooklyn’s L Train shutdown have parted, and some residents are finding themselves in an unexpected, incredible financial position. According to a new report from real estate listings site StreetEasy, residents who signed or re-signed leases in the past year likely saved a collected $26.5 million.
Since April, 2016, while the shutdown was still looming over the neighborhoods in North Brooklyn, rents dropped about 1.5 percent. In 2018, about 20,000 new listings were on the market between Williamsburg and Greenpoint. In the rest of Brooklyn, prices rose about 3.3 percent, according to StreetEasy, since April, 2016. That means that those who signed leases in these neighborhoods in the past year, as prices dropped, got to have their cake and eat it too, since they won’t be dealing with the transportation dilemmas the lower prices were meant to reflect when they signed.
The original reasoning for the L train shutdown, the decaying subway tunnel transporting New Yorkers between 14th Street in Manhattan and North Brooklyn, was changed by Gov. Andrew Cuomo's push to only closing it during nights and weekends instead of shutting the train down entirely .
The study also doesn’t include those who may have signed longer leases, who would have saved even more than this projection.
While those who didn’t flee neighborhoods off the L during the past few years won big in the end, those looking to come to Brooklyn could potentially be hit harder than expected. As prices dropped, developers and building owners were forced to make concessions such as lowering prices to bring people in. Now that the L train is likely to not be shut down, those who operated at a loss may come back that much stricter to try and recuperate some of those lost earnings.
“From the beginning of 2018, gearing up in the summertime, many tenants paying rent that were about to renew, they had the leverage to bargain and get relatively good deals and get some concessions, compared to a couple years prior because of the inconvenience of transportation,” says Miki Naftali, developer and founder of the Naftali Group. “We felt pressure on pricing in our Williamsburg properties. Landlords saw the same thing. We had to compromise and give some concessions to keep tenants in our buildings.”
Those willing to go back to Brooklyn now should buy quickly, though, as StreetEasy predicts that prices will climb back up to pre-shutdown figures within the next few weeks only. According to Naftali, “There’s also a lot of new product that came to the market—particularly on the waterfront; Domino [Sugar Factory], for example. With these changes, the product will be received very well and help push the price up again.”
The shutdown seems to have been avoided for the time being, though the past few years have brought it to New Yorkers’ attentions that the city potentially could shut down a subway line in the future for repairs, despite how it may affect residents. The scare has caused a shift in the real estate market, where people have begun moving back toward centrally located parts of Manhattan near several subway or transit lines, as opposed to outer boroughs where rent may be a bit more affordable, but there is a dependency on one transit line. The study shows that as of October 2018, rents were growing faster in downtown Manhattan and the Upper East Side than in Brooklyn and Queens. StreetEasy warns, though, that if the MTA find less invasive ways of fixing the subway’s problems, those spikes in demand could even out as residents move back out toward the outer boroughs’ more affordable rents.
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