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Developers in driver’s seat as New York City runs out of gas

This corner of New York was a prime site for development.
This corner of New York was a prime site for development.

The rising price of land in Manhattan has claimed many casualties over the past few years, with long-time residents and low-wage workers among its most prominent victims.

However, as gentrification sets in, a different set of residents, those who can be counted among New York City’s motorist population, are increasingly becoming marginalized.

In spite of the stereotypes that persist about New Yorkers and transportation, there is actually a large contingent of drivers around the city, especially when considering the number of cab drivers and freelance chauffeurs for services like Uber and Lyft.

According to city data, there were 183,728 traffic accidents in the city in 2014. The NYPD also reported an uptick in summonses for hazardous violations to 268,467 at the start of the 2015 fiscal year, up from 232,271 a year before.

These residents, who already have to contend with exorbitant parking rates and the city’s productivity in issuing tickets (9.4 million parking tickets were handed out in 2014), are now finding it harder to fill their tanks as gas stations continue to vanish from the city’s main intersections.

“The reason for this is because these are at high-traffic, visible quarters. It wouldn’t make a good gas station if it was in the middle of the block somewhere, where nobody can see the site. These are highly desirable locations,” said Marcello Porcelli, whose firm, Larga Vista Companies, is in a joint venture with Related Companies to convert a SoHo gas station into an 80,000 s/f retail and boutique office property.

MARCELLO PORCELLI
MARCELLO PORCELLI

However, while most attribute this trend to the scarcity of vacant land in New York City, Porcelli said that the demand is due to the heightened willingness of investors and developers to put projects in sites with high risk of contamination.

“People have adapted. The market has gotten more sophisticated and banks aren’t afraid of these environmentally impacted sites. People understand now how to deal with the environmental risks. People aren’t afraid to live in a building that was a gas station,” he said.

Porcelli’s comments align with recent deals involving old gas station sites, some of which involve record-setting transactions. In March of last year, developer Michael Shvo set a price-per-square foot record with 239 Tenth Avenue. The site, which now contains a 12-story building with eight apartments, sold for $855 per s/f.

Meanwhile, 456 Grand Street in Williamsburg, once a petroleum brownfield that required clean-up, is now a 52-unit fully market-rate rental building with studios that start at $2,225.

This is why developers continue to convert gas stations, in spite of heightened scrutiny from environmental agencies due to the risk of spills from underground tanks. Rehabilitating brownfields usually involves measures such as erecting vapor barriers and remediating wastewater. These can be costly, especially when fuel seeps into the groundwater or a neighboring lot.

Shing Wah Yeung
Shing Wah Yeung

Shing Wah Yeung, a principal at Yeung Real Estate Development, which recently acquired an ExxonMobil in the Chinatown area of Manhattan, said that while converting gas stations means dealing with more requirements, developers are more than willing to do the work.

C:UserswilsonDocuments2 Pike Street_studio-c.pdf
3D model of Yeung’s 2 Pike Street project

“All the state regulatory agencies are watching over it. And the site requires remediation work to get all the approval… (But) it’s not necessarily that big of a challenge,” he said.

Currently, there are less than 40 gas stations remaining in Manhattan.

One of the newest gas station conversions is at 330 West 122nd Street in Harlem. The property, which is being developed by RGS Holdings, is one of the most expensive buildings north of Central Park. Studios are priced at $517,000 while penthouses start at $1.8 million.

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