Do Bike Lanes Predict NYC Real Estate Growth?

Important Note: The below analysis is flawed. As such, I have removed it from my homepage because I do not want to mislead anyone with faulty analytics, but I have left this page up in the sake of transparency should anyone else stumble upon any links to it.

The key issue with this analysis is that my model did not account properly for how the rows of NYC DOF’s data were aligned. Transactions that include multiple buildings have the total sales price on one line with the buildings and their respective square footage split onto multiple lines. Because of this intricacy in the data, the average square footage and prices I reported are incorrect.

That said, the methodology of comparing sales along bike lanes to sales within a neighborhood is a smart way to check for the impact of bike lanes. It deserves a more in-depth review. Anyone who is interested can easily (and should!) take my work from below, correct the above issue, and build onto it.

The original article below hasn’t been altered and my files were live from the beginning because I always wanted people to review, check my work, and play with the data. That’s why I do what I do here — because it’s interesting.

I have apologized on Twitter. I apologize to my readers. And I apologize to DNAInfo and anyone who read their article about my work here. I made an honest mistake.

Real estate developers are always looking for ways to predict real estate trends. That entails analyzing the changing variables within a city, identifying correlations with property values & market trends, and then projecting forward. In this article, we’ll take a look at the variable loved most by urbanists who want safe & efficient transportation infrastructure and loathed most by drivers who want cheap on-street parking: bike lanes.

This is the theory. If we can identify a strong correlation between the creation of a bike lane and a non-normal increase (or decrease) in property values alongside said bike lane, then a smart real estate developer could look at the New York City’s future planned bike lanes and invest accordingly (or not).

In Bushwick, I found that the theory looks very promising. Along new bike lanes in Bushwick, sales price per square foot increased by 16% from mid-2016 to mid-2017 while price per square foot actually decreased in Bushwick as a whole during the same time frame.

Bushwick Comparables Summary Analysis
Price per square foot increased by ~16% along Bushwick streets with new bike lanes, but decreased slightly in the whole neighborhood.

Buy real estate where bike lanes are going to be built? Maybe not a bad strategy…

Here’s the detail behind my analysis.

To determine where New York City built new bike lanes in 2017, I overlaid New York City Department of Transportation’s Bike Map from 2017 on top of their 2016 Bike Map and looked for a neighborhood with interesting bike lane developments.

Naturally, as with most things bike-related, I found that neighborhood in Bushwick, Brooklyn.

Since I’ve recently moved from Manhattan to Brooklyn (and I finished my MBA with award-winning real estate expertise!), this is perfect.

Let’s talk about Bushwick bike lanes

One of New York’s hottest neighborhoods today is Bushwick. I don’t need to provide any support for that statement. If you’re on my website, you already know that. Well, it turns out there is completely new bike infrastructure there, as you can see in the animation below which compares Bushwick’s bike lanes in 2016 to Bushwick’s bike lanes in 2017.

Bushwick bike lanes in 2017 compared to 2016
Bushwick bike lanes in 2017 compared to 2016.

Look at all those new bike lanes! Here’s a legend so you can understand precisely what you’re looking at. (The new blue lines are new bike lanes.)

The legend for NYC DOT Bike Maps.
The legend for NYC DOT Bike Maps.

In detail, Bushwick has new “convential [sic]” bike lanes spanning both Irving Avenue (eastbound from #1-#1085, numbers according to a quick look on Google Maps) and Knickerbocker Avenue (westbound from #151-868). Jefferson Avenue (#1035-#1355) and Cornelia Street (#304-#415) have new northbound bike lanes and Hancock Street (#981-#1400) has a new southbound bike lane. Lastly, Woodward Avenue has been connected to Metropolitan Avenue, but I’m going to ignore this even though it’s a nice connection to Williamsburg. Note that the street numbers change north of Wyckoff Avenue because Brooklyn becomes Flushing. For simplicity’s sake, I’ve taken that into account in the following analysis by excluding anything north of Wyckoff.

To determine if the bike lanes had any impact on real estate prices, let’s go to the comps!

As usual, I’ll be using New York City Department of Finance Rolling Sales data. (If you’re interested in how to map and analyze NYC comparable sales data, take a look at my previous work.)

The sales data currently published by NYC DOF spans from June 1, 2016 to May 31, 2017, so it has 7 months of 2016 data and 5 months of 2017 data. I’ve drilled down into those figures and isolated the following 47 sales, all of which occurred along the streets listed above and within the applicable building numbers. To compare, I’ve divided them up into sales in 2016 (pre-bike lanes) and sales in 2017 (post-bike lanes).

Sales from June 1, 2016 to May 31, 2017 along new bike lanes in Bushwick.
Sales from June 1, 2016 to May 31, 2017 along new bike lanes in Bushwick.

(Digression: Yes, I’m simplifying things a bit by assuming that sales in 2016 were completely unaffected by new 2017 bike lanes and that every new 2017 bike lane affected every sale in 2017. In reality, not all new bike lanes were in place on January 1, 2017, so not every 2017 sale would reflect having a bike lane at the time of the sale. I’m also disregarding market changes, differences in building quality, etc. But correcting for all of that would take way too much time.)

Now, if we summarize this data, we find that the average sale price per square foot along streets with new bike lanes increased by nearly 16% from just the middle of 2016 to the middle of 2017. That’s a huge jump! And it’s even more impressive when you compare it to all sales within Bushwick, as I did. Average sale price per square foot in all of Bushwick actually decreased slightly.

Bushwick Comparables Summary Analysis
Price per square foot increased by ~16% along Bushwick streets with new bike lanes, but decreased slightly in the whole neighborhood.

Beyond the large price differential, also take a look at the volume of sales. Just five months of 2017 sales along bike lanes is almost at the level of seven months of 2016 sales in the same area whereas five months of 2017 sales in all of Bushwick is lagging pretty far behind the 2016 sales rate.

Of course, this analysis does not account for any other market factors and it simplifies a few points, but it definitely adds confidence to the notion that it’s smart for real estate investors and developers to follow the bike lanes. And it makes sense. Bike lanes make for easy transportation and increase foot traffic to local businesses. You won’t park your car and hop into a store if you see something interesting, but you’d surely get off your bike to take a look.

For those real estate developers and investors looking for more information on future bike lanes, check out these links:

In conclusion, is this analysis statistically significant? Not quite. Could the analysis be honed further? Absolutely. But at the end of the day, these results certainly lend credence to the idea that new bike lanes can help pinpoint smart real estate investments at a micro level.

To be more confident using bike lanes as a predictor for real estate development, this analysis should be repeated and tested across a variety of neighborhoods and adjusted for external market changes. But I’ll leave that to someone else.

I’ve uploaded my Bushwick Bike Lane Comparable Sales Analysis so anyone who feels like playing with the numbers can do so (that link goes to a spreadsheet). The bike maps I used for the overlay analysis are linked above. That’s all you need to continue this work!

If you have any questions or comments feel free to reach out via LinkedIn, Twitter, or in the comments below. It’s good to be back!

Summary
Do Bike Lanes Predict NYC Real Estate Growth?
Article Name
Do Bike Lanes Predict NYC Real Estate Growth?
Description
An analysis of Bushwick real estate shows a significant increase in sales price per square foot along new bike lanes relative to the rest of the neighborhood.
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Publisher Name
AndrewLax.net
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