ULI New York Blog

Wrap-Up: YLG Mobile Workshop: How the Second Avenue Subway Sparked a Restaurant Revolution in the UES

Nightlife Rebounds above New York’s Unfinished Second Avenue Subway

SAS 1The renaissance of hip restaurants on Second Avenue in Manhattan’s Upper East Side can be attributed to more than the coming of the Second Avenue subway, the Urban Land Institute’s Young Leaders Group (YLG) learned at their July 23 Mobile Workshop, “How the Second Avenue Subway Sparked a Restaurant Revolution.” Contrary to the popular narrative, the revival gained momentum as a result of the area’s building stock, retail rents, and the demographic changes underway despite the disruptiveness of subway construction.

Thirty-one YLG members convened at the Second Avenue Subway Community Information Center and heard from representatives of key project contractor Parsons Brinkerhoff, brokers from Newmark Grubb Knight Frank, and the owners of two Second Avenue restaurants—Boqueria and The Gilroy. The perspectives from these key players carry critical insights for the continued evolution of the area.

SAS photoA stroll down Second Avenue reveals how quickly the area has changed. Known until recently for an eclectic mix of dive bars and fine dining, Second Avenue restaurants today are bustling with young professionals well into the evening. Some even have sidewalk cafes despite construction barriers and equipment that mar the streetscape. The Boqueria, owned by Yann de Rochefort, offers tapas and elevated pub food in a hipster-styled atmosphere. The Gilroy, owned by Josh Mazza and Steve Laycock, impresses with a signature list of Negroni cocktails, crisp margherita flatbread, and light and airy pierogis.

Newmark retail brokerage director Jay Gilbert says that the key to this transformation has been the combination of existing building typologies and the centrality of Second Avenue within Yorkville. Yorkville is in the eastern Upper East Side, roughly bounded by Third Avenue and the East River to the west and east, and 79th and 96th Streets to the south and north. Ground-floor retail spaces range between 1,500 to 1,600 square feet, which is ideal for restaurants. Restaurant owners can also readily combine retail spaces, which will allow for further growth as existing restaurants consider expansion and new restaurants with larger space needs evaluate opening establishments in the area. By comparison, the architecture on Third Avenue is more suited to the existing mix of co-ops, banks, and grocery stores.

SAS outsideRelatively low rents are also important. Mr. Gilbert states that retail rents on Second Avenue range from $150 to $175 per square foot, which is one-third of the rents on Bleeker Street—a popular destination for restaurants further south. Mr. de Rochefort and Mr. Laycock have found that these lower rents ensure the profitability of their new establishments.

Yet, the building stock and rents alone cannot determine the future of Yorkville’s restaurant scene. After a disproportionate increase of seniors in Yorkville between 2000 and 2010, both Mr. de Rochefort and Mr. Laycock find today that young professionals are moving to Yorkville and looking for mid-priced restaurants nearby. The area is also one of the densest in the city, with over 100,000 people per square mile.

All of these conditions exist without the subway, which will make Yorkville more accessible. With its groundbreaking in 2007, the subway received its first budget allocation in 1929 and was pilloried as a pipedream in a 2013 episode of the TV show Mad Men. At 84 percent complete today, the first stage is scheduled to complete in December 2016. When service begins, the Q train will be rerouted to run from Midtown to 96th Street, from its current route across the river into Astoria. The projected ridership of 200,000 trips per weekday will relieve the 4-5-6 trains on Lexington Avenue, which is the most congested subway line in the United States with 1.3 million daily riders.

How the increased accessibility will affect development in the area is less clear. Rents will likely increase, and demographic changes could accelerate. More trendy restaurants could open. Yet, there will be limits to this growth. Despite the verdant Carl Schurz Park and riverfront trails for walking, running, and biking, a garbage transfer station is being built where 91st Street meets the East River.

Regardless, for restaurant owners and diners alike, there is cause for optimism. Restaurants like Boqueria and The Gilroy are already profitable in today’s market. The Second Avenue subway will simply bring upside.

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