Congestion pricing has had an impact on property values in other cities. But New York may be different.
Faced with the prospect of congestion pricing for vehicles in the city’s busiest neighborhoods, New York’s commercial real estate industry is wondering how the measure will affect property values. In Singapore, a similar congestion fee to reduce vehicular traffic led to a 19 percent drop in prices on retail real estate within the affected zone, according to a 2015 study by The Journal of Urban Economics. So far, real estate industry insiders say that type of impact is unlikely to happen in Manhattan.
“We had a conversation with one of our LPs recently about that, about trying to understand how dependent they are on vehicular versus pedestrian traffic because of congestion pricing,” says Jeff Berman, general partner at Camber Creek, a venture capital firm focused on investing in real estate technology companies. “Remember, specifically through New York, a lot of the vehicular traffic is trying to bisect the city, so it’s not comprised of people that are shopping, buying or living here anyway. So, again, this is still a big question mark.”
Most shoppers in New York City comprise a mix of tourists, office workers and local residents, according to Tom Citron, executive managing director with Colliers International, a commercial real estate firm. Since these demographics largely use public transit or walk down the street, the number of vehicles going into the city to shop are minimal, and therefore, less vehicular traffic due to congestion pricing should not contribute much to existing retail traffic patterns, Citron notes.