The one constant in our fast paced, stimulating city is change. Some changes are easier to adapt to than others; one change affecting the L Train shut down for 18 months might prove a more difficult adjustment. This is the train that goes from Manhattan to Brooklyn and is often associated with a cool, hipster culture. The shutdown lasting for a potential year and a half might be considered one of the biggest disruptions in transit history.
This major subway shut down will not only affect tens of thousands of New Yorkers and Brooklynites but may also have an impact on the real estate market which recently has enjoyed a spike in property values.
In order to gain insight into how this L train shutdown may affect renters, buyers, and the Brooklyn real estate market, I interviewed the President and Veteran Lead Broker of NC Pepe Corp, Chris Pepe.
Dr. Robi: Mr. Pepe, How long have you been the President & Lead Broker of NC Pepe Corp?
Mr. Pepe: I have been the Lead Broker since 1998, and President since 2006.
Dr. Robi: What makes the New York City/Brooklyn market such an interesting market to specialize in for you?
Mr. Pepe: Being that I am the 3rd Generation running NC Pepe Corp a Brooklyn Based multi-faceted Real estate firm for the past Nine decades we have many ties to the Brooklyn, & NYC community. We don't only sell or lease property, we also own property. NCPepeCorp has developed very intimate and personal relationships with our clientele, because of our longevity in the Real Estate industry. The most interesting aspect in the Brooklyn/NYC Real estate market is how it's constantly changing, not only in who is buying and selling but how prices have defined markets, demographics in specific areas. Buying in a niche market is a "Status Thing" for most residential buyers. For Commercial Buyers or investors, it's as it's always been, which is "the return on their money". However knowing where and when to buy to capitalize on your investment is an "Art Form, maybe with a bit of luck thrown in. "
Dr. Robi: The Metropolitan Transportation Authority plans to close the tunnel that carries the L train, one of the most popular subway lines, for about a year and a half starting January 2019. How will this impact the neighborhoods which the L train runs through?
Mr. Pepe: The L train shut down news is already being absorbed in the rental & sales market already, buyers, & renters alike are trying to use this as a negotiating strategy. Once the L Train line is shut down, sales inventory will be low, and sellers will wait to market their property until the L train comes back. However, buyers will possibly have a great opportunity to possibly purchase
multi-fams, or residential units at a lower price. On the flip side many of the people ho do use the L train, use it recreationally, and lots of people work from home, therefore staying locally and using the local retail shops in Brooklyn, or lower Manhattan on a more frequent basis. It's going take some getting used to, though, most L train riders from Brooklyn to 14th St/Union Sq; especially from North Brooklyn like Williamsburg have a very short commute, like10-15 Minutes. The MTA, however, has outlined several potential options, including shuttle service over the Williamsburg Bridge, increased service on the J, G, and M lines, and regular and Select Bus Service across town in Manhattan. It's not going to be that bad, maybe double the time to get to the Manhattan, so a total of a 1/2 hour each way...
Dr. Robi: What residential areas in Brooklyn will this impact the most?
Mr. Pepe: Williamsburg, Bushwick, East Williamsburg
Dr. Robi: Who will be affected the most by the L train being shut down?
Mr. Pepe: Manhattan Bound commuters coming from Brooklyn, they will just have to leave a bit earlier to get the JM & G train, or the shuttle bus . The L train work and shut down is not going to be Armageddon for the Brooklyn Real Estate industry. Rental driven property for Developers and current building owners that depend on their current rent rolls and high rents that are being earned at the moment could create some to having to sell or re-finance to stay afloat until the rental prices come back to the rents those were receiving prior to the L train shut down.
Dr. Robi: Buyers have been known to use the L train as a negotiating strategy for properties. The L train has also been linked to the huge increase in values of the property value in Brooklyn. Does this mean the property value will go down? And if so, how much?
Mr. Pepe: Some are saying property value will go down 25%. I don't know how anyone regardless of how experienced can actually put a number on that. Yes property value could go down,this really depends on the residential & commercial rental market for those areas being affected. Property owners who must sell in that market during the L train shutdown will still be able to sell at a premium regardless, but their profit won't be as much.
Dr. Robi: What is being done to accommodate commuters for the L train being shut down?
Mr. Pepe: I have actually called and talked with the MTA, they have told us that an enormous increased train service on the Greenpoint, Brooklyn-based G train, the Brooklyn direct to Manhattan J/M lines along with round the clock Shuttle Service will significantly ease the transition tremendously. Landlords or Sellers of property can use that In my opinion in a way to still obtain high sales and rental premiums. The L train riders have been so spoiled and yes they pay for that in high purchase prices for property or high rents but it cost what it cost if you want to live in NYC or a suburb of NYC like North Brooklyn with the ease and convenient use of The NYC Subway system. It will be back to normal before you know it, and the L train Subway tunnels will be repaired and fixed, and hopefully not needing another shut down for a very, very long time.
Dr. Robi: What does this mean for commuters in terms of travel time?
Mr. Pepe: This depends on where their current starting point is on the L train line.
As the best example If you are using the Bedford Ave L train (1st L train stop In Brooklyn) stop and that's where you get on the train to go into Manhattan, instead of 10 minutes to Union Sq/14th Street, that same commute will take approx. 25 minutes. All in all, add at least 20 minutes to a typical commute.
Dr. Robi: How will this change impact the landlords and renters for these Brooklyn properties?
Mr. Pepe: Landlords should try to sign multi-year residential leases with their tenants at the same rent without increases to keep their apartments filled to limit vacancies. Same with Commercial tenants. Landlords that have vacancies be ready to negotiate, and or give concessions or incentives, for example, One month free, NO FEE Rentals, rental reductions, free internet etc. Again all of this will be short lived, the L train repairs will be done, and done quickly. The MTA is under a tremendous amount of pressure to start this work and complete it on time because of the effect this shutdown will cause
Dr. Robi: After the subway tunnel work is completed on the L train, what do you think this will do to the value of the North Brooklyn Real Estate Market?
Mr. Pepe: Really depends on the Economy at the time, how long it really took to finish & re-open the L train, depends on interest rates at the time. But in my opinion, Real Estate Value will go up, mainly because rents will continue to go up, the convenience of the L train line drives the property values for the people that mainly use the L train as transportation .