The High Line’s ‘Halo Effect’ On Property

THE WALL STREET JOURNAL

 

Prices of apartments along the High Line have gotten a measurable boost from their proximity to the popular West Chelsea park. Photo: Kevin Hagen for The Wall Street Journal

By Josh Barbanel Aug. 7, 2016 6:22 p.m. ET

The High Line enthralls thousands of tourists every day who walk through its mix of industrial ruins and flowers on track beds above the streets of Manhattan’s West Side. But new data show that this aerial park has also helped transform real-estate values for apartment owners in the surrounding blocks since its first section opened in 2009.

Resale values of properties already nearby rose a cumulative 10 percentage points faster than areas only a few blocks farther away. It is the “High Line’s halo effect,” according to the report by real-estate website StreetEasy, the first in a series of studies it is planning on the impact of New York City icons on their neighborhoods. While resale prices in many other Manhattan neighborhoods have been tapering off, the report said they have continued to rise near the High Line.

Twenty apartments there have sold for $10 million or more since 2009. The median price of condos above 20th Street in the High Line neighborhood topped $6 million in the 12 months ending in May, mainly because of sales at 500 West 21st St. along the High Line. More are on the way: 11 developments with 155 apartments are under construction, and nine more are planned with 751 apartments or hotel rooms, according to Halstead Property Development Marketing.

“Pricing exceeded a lot of people’s expectations,” said Stephen Kliegerman, president of the Halstead firm. Condo prices have risen to between $2,000 and $3,000 a square foot from about $1,000 in 2009, he said, and the units have become more elaborate in their architecture and finishes.

The High Line was part of a larger development effort that included the 2005 rezoning of West Chelsea, then a decaying industrial area that had begun to attract art galleries. The rezoning preserved some older industrial buildings and allowed residential development in others. It allowed the transfer of air rights along the High Line and offered bonuses for creating stair and elevator access to the planned park.

StreetEasy’s study used a proprietary price index to track repeat sales at the first two sections of the High Line that were built. The first, south of West 20th Street, opened in 2009, and the second, extending north to West 30th Street, opened two years later. The third section, from West 30th to West 34th streets, opened in 2014. Resale prices of homes bordering the first section rose by 8.9% more than those two blocks east, while resale prices bordering the second section rose 12.8% more. At the Spears Building on West 22nd Street, an 1893 manufacturing structure converted to condominium lofts a century later, apartment 3E’s floor-to-ceiling windows look out onto the High Line. The 1,600-square-foot apartment sold for about $350,000 in 1997, but by 2008, when the High Line was under construction, it sold for $2.2 million. In March, it sold again for $3.15 million, a 40% premium since 2008. “The High Line changed the dynamic of the neighborhood,” said Michael Chapman, a broker at Stribling & Associates who represented the sellers in the most recent sale, “making it more accessible to more people.” Now there are more restaurants and services coming to the neighborhood, he said, while it “still has that kind of hipness of the West Chelsea area.” Some of the resale buildings included in the High Line study are luxury condos that went up under the new zoning at the height of the real-estate boom.

At Highline 519 on West 23rd Street, an eighth-floor apartment sold for $2.85 million in 2014, up 16% from its first sale in 2007. Leonard Steinberg, president of Compass, a Manhattan brokerage, said that the potential value of real estate near the High Line hasn’t yet been realized. That will come, he said, when Hudson Yards, at the northern end of the park, is complete. “West Chelsea hasn’t been completely bracketed yet,” he said. “People have to be a little more patient. The upside to West Chelsea is not realized.”