It was but one line in Mayor Michael Bloomberg’s State of the City address in January, but it could prove to be one of the biggest of his dozen years in office.
“In the area around Grand Central, we’ll work with the City Council on a package of regulatory changes and incentives that will attract new investment, new companies and new jobs,” the mayor said from the stage inside Morris High School in the Bronx.
Hizzoner spent more time talking about Cornell’s Roosevelt Island tech campus, keeping the Hunt’s Point Produce Market from moving across the Hudson to Jersey and efforts to further expand the blue-collar workforce on the waterfront. Even the redevelopment of nearby East Fordham Road and Webster Avenue got equal billing with these vague pronouncements about “the area around Grand Central.”
Despite the scant mention, it turns out that for an administration that has never shied away from big plans, this may be one of the biggest projects yet.
In what is likely to be the latest, greatest and last of the grand Bloomberg rezonings, City Hall has turned its focus to Midtown East. Under the direction of City Planning Commissioner Amanda Burden, the administration has undertaken 115 rezonings in almost every corner of the city, remaking nearly a quarter of its landmass.
Now, it is time to remake the middle of Manhattan, to redevelop one of the most developed swathes of land in the world.
It was not the first time Robert Steel, the deputy mayor for economic development, had considered the plight of Midtown East, but he recalled it as the moment everything came into focus. Around this time last year, the former Goldman exec and Wachovia chief was standing on the roof of the Hearst Tower two blocks south of Columbus Circle, gazing out at the city surrounding him.
The Hearst building itself is an apt metaphor for the plans the city is currently contemplating. Originally built by William Randolph Hearst in 1928, the Art Deco dandy rose to six stories, with plans for a tower to rise above. Those were waylaid, for nearly eight decades, courtesy the Great Depression. But it would take another great boom to see the project through, and in 2006, the new Hearst Tower opened, with its faceted obsidian exterior, a gem of modern office life.
It was created by the high-tech practitioner and Pritzker Prize-winner Sir Norman Foster and received a LEED Gold rating for sustainability, the first office tower in the city to do so. The base of the tower remains, a nod to history, but it was gutted to make way for a soaring lobby, complete with a waterfall that recycles rainwater, helping to cool the space and cut down on A/C costs.
This is precisely the sort of building that Mr. Steel wants to see more of in Midtown, still the heart of the city’s commercial core.
“Think about what Midtown was historically, the Pantheon for corporate America,” he said during a recent phone interview. “It was lots of jobs, but also a symbol for all the Fortune 500 companies.”
But it was not so much the Hearst Tower as the ones surrounding it that got Mr. Steel concerned. A few blocks south, Mort Zuckerman was getting underway on 250 West 55th Street. In the distance stood the new Times headquarters, and across the street the still mostly-empty 11 Times Square. To the north was the Time Warner Center, and most telling of all, 3 Columbus Circle–another 1920s beauty built for General Motors, shoddily reclad in glass during the last boom by Joe Moinian, an effort to modernize the building.
Were Mr. Steel standing on the other side of Midtown, say atop the Bloomberg Building, he could point to almost no new development whatsoever besides the tower his boss and Vornado’s Steve Ross had built in 2004. And even then, the top half of that building, like the Time Warner Center, is filled with apartments for the likes of Jay-Z (Time Warner) and his wife Beyonce (Bloomberg). What new development there might be is much closer to 3 Columbus, buildings that have been “refreshed,” than anything built new, from the ground up.
The city wishes this were not the case, but given the vagaries of Manhattan development, from the challenges of clearing out tenants to the cost of construction, the status quo is often the easiest choice for a landlord to make. Developers argue that they need incentives, namely air rights, to do anything more. The number of new buildings could be counted on one hand.
“While new windows and HVAC systems can be installed, the fundamentals of ceiling heights and column configurations are fixed,” Mr. Zucckerman, chairman of Boston Properties and owner of a number of buildings in the area, including the iconic Citicorp Tower, said in an email. “To incentivize owners to empty leased office buildings and replace them simply requires that a much higher density be allowed.”
When the city began to look at solutions, the administration was struck by just how severe the situation in Midtown east had gotten. “We did an audit, and we found that 80 percent of buildings were more than 50 years old,” Mr. Steel said of Midtown East, roughly 39th Street to 57th Street, east of Fifth Avenue. “Basically it feels like the 1940s in a lot of places. We just think this should be a showcase place for the city, especially around Grand Central.”
But the city is focusing on much more than just Grand Central, based on a preliminary presentation it gave to community boards earlier this month, with the potential upzoning of the entire area. Still, there is a special focus on the blocks around the train station, as well as along Park Avenue, seen as especially valuable as well as especially outdated.
The entire rezoning might not cover the largest footprint of any the administration has undertaken, but it could well have the largest impact. Stretching to Second Avenue in the 40s and Third Avenue in the 50s, the current study area measures 85 square blocks, roughly 250 acres of the most densely developed property on earth. It is equivalent to about 10 Hudson Yards.
Yet compared to a place like Hong Kong or Singapore, the densities are piddling. “On a macro level, we have to remain competitive on a global basis in terms of creating modern office space,” real estate scion and Association of Better New York chairman Bill Rudin told The Observer. “Back in the ’80s, they shifted the zoning from the East Side to the West Side, and it kept going out to Hudson Yards. But Park Avenue is still very desirous.”
Steven Spinola, executive director of the Real Estate Board of New York, put it in even more stark terms. “Right now, our buildings top out around 50 stories,” he said. “Why shouldn’t they top out around 80 stories? They do in a lot of other great cities.” According to one much-discussed proposal, they could, with air rights jumping as much as 50 percent in certain areas.
An initial proposal is to be released on July 11, and the city hopes to begin the arduous public review process by the first quarter of next year—just before the notorious countdown clock at City Hall blinks off.
There are those who fear that the city is putting the cart before the conductor. One of the big arguments for rezoning Midtown East is the arrival of East Side Access, which will usher the Long Island Railroad into Grand Central by the end of the decade (assuming no further delays). The Second Avenue subway might someday reach the area as well. But at the same time, the city has made massive infrastructure investments in areas like Hudson Yards and the World Trade Center site, where the Related Companies and Silverstein Properties struggle to find tenants. These expenditures, for expanding the 7 train and rebuilding ground zero, were partly based on the argument that Midtown had seen its day.
The case for reviving it is good, but not at the cost of these other areas, the thinking goes.
“The public is spending billions of dollars at Hudson Yards and ground zero, and for good reason,” Raju Mann, a former city planner and member of Community Board 5, said a recent meeting of the board. “We haven’t even seen what these projects have produced yet, so how can we be sure what’s appropriate for Midtown East?”
And yet developers outside of Midtown East areas are not worried, pointing out that the city’s proposal could take years, if not decades, to come to fruition.
“My first reaction was to be concerned about it, but the more I thought about it, it’s a really long-term proposition,” Jay Cross, president of Related Hudson Yards, told The Observer. He said the proposal could even be self-defeating. “It will also make these buildings more valuable, just perceptually, which will drive up the building cost,” he said. “That means they cost more to trade and assemble the sites, and by the time you’ve done all that, you may not be able to afford to replace the buildings.
Larry Silverstein shared this sentiment at the topping out of 4 World Trade Center on Monday, his shiny new office building that remains half empty. “My hunch is, we’re going to do fine,” he said, pointing to the drift of New Yorkers to both live and work in Downtown and Brooklyn.
There are other demographic shifts afoot, as well, though, that could undermine the success of the city’s plan. If one area has flourished during the past few years it is not Midtown East or Hudson Yards but Midtown South. As financial firms, with their love of shiny buildings and vast trading floors, have retrenched, the city’s tech sector has flourished, and it largely prefers old buildings to new. Even those firms moving to Midtown, like Facebook and Twitter, are setting up shop on Madison Avenue, filling spaces that are more Mad Men than Blade Runner. “We don’t know what the office of the future will look like yet,” Mr. Mann said.
Mr. Rudin pointed out that the two do not have to be mutually exclusive. “We need office space of all types for all types of tenants,” he said. “The important thing is that we plan for the future.”
The past is an issue, as well, as some preservationists worry about taking a full accounting of Midtown’s historic fabric before we begin bulldozing it. “I’ll be the first to admit that just because a building is X years old doesn’t mean it’s worth saving and reusing,” said Peg Breen, president of the Landmarks Conservancy. “But we can’t just plow it all under and build Midtown anew. Why bulldoze the place without seeing what’s there first.”
Vishaan Chakrabarti, director of Columbia University’s real estate development program and former head of the Department of City Planning’s Manhattan office, warned against knee-jerk preservation in the heart of Midtown. “This is the engine for the entire city,” he said. “We cannot freeze it in amber. If we do, we’ll end up like Paris, a museum and nothing else.” Pro-development types love invoking Paris. It is the bête noire of businessmen the world over, apparently.
Still, the city argues that it is not obsessing over Midtown but instead finally giving it the attention it was used to in the past after a fair amount of neglect. “Really, this is a response to the five borough economic plan, which has focused outside of Midtown more than any administration ever has, I think,” Mr. Steel said.
This could be the case in more ways than one, as some traditional Midtown heavyweights, like SL Green, have felt neglected amidst the city’s westward expansion. Earlier this month, The Journal revealed that the city’s largest commercial landlord had teamed up with Hines, another player who has mostly developed along Third and Lex, to replace a clutch of turn-of-the-century buildings immediately west of Grand Central, on 42nd Street between Madison and Vanderbuilt avenues. The city freely admits that it is working with local stakeholders to craft its plan but denies that they are the ones sketching it out.
“We will listen to what our partners in the private sector have to say, as well as the community, but this is definitely the mayor and his team’s plan,” Mr. Steel said. One City Hall source even called it “Bob Steel’s baby,” the marquee project of the deputy mayor since he joined the administration two years ago.
One need look no further than 425 Park Avenue for proof of the problems with Midtown’s current zoning. One of those bland mid-century grandees, all flat glass planes, it was completed in 1958 and spans an entire block on Park. David Levinson, a partner at L&L Holdings, would tear down the 32-story behemoth if he could and replace it with something better. He is in the rare position of owning a building that will be empty of tenants coming 2015—normally a bad thing, were L&L not set on ridding itself of the low ceilings and column-choked spaces that fill the space.
“It’s an entire block-front on Park Avenue, and that opportunity hasn’t existed in my lifetime,” Mr. Levinson said with relish.
But he is confronted with the challenge of the zoning having changed three years after his tower was built, and were he to replace it, he would be left with a much smaller building. It is a problem faced by landlords all across Midtown East.
His clever real estate attorneys have determined that he could demolish all but the bottom quarter of the building and build up from there, getting as close to a new building as one could hope for. He has convened a private competition between 10 of the world’s top architects to solve this vexing problem.
Naturally, his fingers are also crossed that the city might solve this problem for him. “The zoning does not make this easy, but that’s the way it is, and we’re going to comply with that,” Mr Levinson said, “unless something changes.”
It might, and it might not. According to city planning sources, the proposal could get downsized to include only the immediate blocks surrounding Grand Central. There are almost 2 million square feet in development rights that once belonged to the Penn Central Railroad, currently owned by a little-known firm called Argent Ventures.
The city would add to that pot by a few million square feet, selling off the extra air rights, which would go to fund improvements to the surrounding streets and the spaces within Grand Central, particularly the local, and long-neglected, subway stations. This would benefit but a few developers owning surrounding properties. City Hall denied it has shrunk its scheme, but also admitted that it has yet to finalize the boundaries.
The administration is stuck between what it wants to build and what it has time to build. With thousands of constituents in Midtown, many with money to make and lose, it would be difficult to realize a sweeping plan within the next 18 months—public review alone takes seven. “I’m not even sure if there is unanimity at City Hall on what to do,” as one top land-use attorney put it. “I hope they can move quickly and not settle for the lowest common denominator.”
Even those critical or wary of the plan want to see it succeed, they just want to see it done right. The Municipal Art Society has long been a champion of Grand Central Terminal, helping to save it decades ago with Jacklyn Kennedy Onassis, and they have taken a keen interest in this project as well. Vin Cipolla, the group’s president, hopes the mayor will take time in coming up with a plan, while realizing that if the administration puts it off, the next one might not take it up, either.
“Any plan for this area needs to be carefully balanced and worthy of Grand Central, the Chrysler Building and the Seagrams building,” Mr. Cipolla said. “It’s a part of the city where the bar has to be very high.”
And so do the buildings.