Brooklyn Brokers On Who Could Benefit From the L Train Shutdown
There’s no shortage of doomsday talk about the coming service disruptions to the L train. But might this situation have any winners? We spoke with an assortment of brokers in the area to get their take.
At least one broker found cause for optimism in the news last week that a second train line serving North Brooklyn, the M, would shut down part of its service for a year, prior to work disrupting the L train’s service between Brooklyn and Manhattan. Hodges Ward Elliott’s Daniel Parker says multifamily investment along the parallel J, M and Z lines is poised for a surge.
And it’s been strongly implied by MTA chair Tom Prendergast that part of the aim of shutting down a portion of the M will be to prepare for the extra ridership when the L is out. The MTA estimates that 300,000 commuters will be impacted.
Daniel, who’s marketing a multifamily portfolio near the four stops along the JMZ that won’t be impacted by any service disruptions, says he expects young professionals living along the L to decide it won’t be worth it to stay put, and move closer to the JMZ, in South and East Williamsburg.
It may not be much of a stretch. Daniel and his team analyzed the tenancy of the portfolio of about 120 units, and he says 42% of its tenants are young professionals who work in TAMI sector jobs in Manhattan.
The interesting bit? If you look at where the M train goes on a map, you may notice that it carves a path right through the Flatiron District, the heart of Silicon Alley, before making its way into the middle of Midtown. And the J train heads the other way when it hits Lower Manhattan: straight into the Financial District.
"The area along the JMZ in South Williamsburg is going to see a big spike in demand with limited new supply," Daniel said. "It's not hard to imagine strong rent growth in the next few years."
It's not just commercial brokers who think so. Madeline Muldoon, 25, works at Motorino, a pizzeria & bar near the Marcy stop on the JMZ. She lives nearby, and told us she’s already thinking her apartment’s proximity to those train lines could mean a rent hike, and possible pricing out.
“It’s kind of scary because everyone’s moving further out as it is," she told Bisnow. "Where do you go?”
On the office side of the equation, ABS Partners’ Ben Waller, who heads up the firm’s Brooklyn office, called us just after ascending the steps of the L train. While he said the uncertainty over how the MTA will mitigate the disruption is troubling, he sees room for some cautious optimism.
Ben’s team mostly does deals for companies moving from within Brooklyn, and some that are coming over from Manhattan, and he says the demand he’s seeing is mostly from tenants moving within Brooklyn and not even considering Manhattan. “They’re not really concerned at all about the L train situation,” he said.
Citi Habitats’ Chris Havens, who reps office tenants on small leases of typically 5k SF or less, said the silver lining could be abstract, but real: a paradigm shift among those tenants as they see they don’t need to leave the neighborhoods where they live to open up office space. Chris said if that happens, it could help spur more office development along the L, but he doesn't see it being enough to meet demand.
CPEX managing partner Tim King invoked the title of a Paul Simon song: One Man’s Ceiling is Another Man’s Floor.
Tim’s not ready to say where he thinks commercial property values will increase, but he said he’s sure it’ll happen somewhere. He sees the shrewdest among retailers on corridors like Bedford Avenue potentially benefiting by locking in a cheaper lease, learning the market and riding it out until things return to normal.
Uncertainty’s a big factor here, he says, but he sees some scenarios where certain businesses and landlords could benefit. If the MTA sets up a shuttle bus, for example, where might folks line up to board it? Some retailers might see foot traffic that they don’t even get now.
GFI’s Sasha Berg says renters along the L who are willing to walk a little further or who don’t rely on the train will be winners. He sees a 12% to 15% drop in rents, and points out that the average one-bedroom in Williamsburg goes for $3,100, so some relief on rent wouldn’t be such a bad thing for keeping the area attractive to young professionals.
As for multifamily buildings along the JMZ line exploding in value, Sasha thinks it’s likely, but not until the MTA says exactly what it intends to do to get people around with the L shut down, and a date is announced for when it’ll start.
But he acknowledges that things could go any number of ways. “This is New York,” he said. “Anything and everything can happen.”