Midtown East Rezoning: Now With More Housing! (and Air Rights)

The area north of Grand Central Terminal still has the highest office rents in the city, but the building stock is aging.

The area north of Grand Central Terminal still has the highest office rents in the city, but the building stock is aging.

The new Midtown East rezoning proposal is out—“A” Applications, in Department of City Planning speak—and it’s got a little bit of something for everybody. Developers and the community board get more housing, the churches and synagogues get more useful air rights and diners get more rooftop seating. City Planning’s aim remains the same: promote new office development in the area north of Grand Central Terminal, America’s premiere office district, which was built out in the pre-war and immediate post-war years, with less than 5 percent of the zone’s 70 million square feet of office space constructed within the past two decades.

The biggest change is that housing will now be allowed as-of-right—that is, without the sort of City Council review that often provokes demands of affordable housing—so long as it occupies less than 20 percent of a new building. Planners said that this change was in response to concerns by the community board and civic groups that a single-use district would be detrimental to weekend and evening street life, but it also caters to the desires of developers, who have perhaps the most to gain—for now, at least, residential development fetches far more than office space of hotels. (Ironically, these high values also mean that new housing—especially condos—have a higher likelihood of being used as pieds-à-terres, which would negate some of the vitality and street life arguments for allowing it.)

Traditionally, office buildings in Manhattan have almost never included residential components—the planners cited the examples of the Bloomberg Tower on the East Side, and the Random House Tower and the Time Warner Center on the West Side as the only precedents. But with sky-high demand for residential space, mixed-use towers that include more than just retail space look far more likely. The city is still looking to sell commercial air rights for $250 per square foot, but said that residential ones would likely have a higher price point.

Hotels, on the other hand, will be restricted to the same proportion in new buildings, just 20 percent—both with the caveat that 80 percent of the building must be used for office space. For the moment the calculus tips heavily in favor of residential as opposed to hotel, but that could change in the future if the ultra-luxury condo market falters or if hotels become more desirable. (Existing hotel square footage will, however, be grandfathered in, even if the building is redeveloped.)

Churches and synagogues in the new northern subarea will find it easier to sell their unused air rights.

Churches and synagogues in the new northern subarea will find it easier to sell their unused air rights (click image for full-sized PDF).

Landmarks to the north of Grand Central also have something to cheer in the new plan: a new air rights transfer district will be created between 48th and 49th Streets to the south and 57th Street to the north, which will allow St. Patrick’s Cathedral, St. Bartholomew’s Church, Central Synagogue, Lever House and others to sell their unused air rights to any buyer within the district. (Previously they’d only been allowed to transfer them to adjacent parcels, seriously limiting their use.) This air rights transfer district, however, would not go into effect until 2019, whereas the rest would enter into effect in 2017—a date that planners left open to review after the public debate process.

Developers would also get slightly more leeway to redevelop parcels with less than the 200 feet of street frontage that the original plan had set as the lower limit for large-scale redevelopment. Sites with more than 150 but less than 200 feet of frontage could apply for a waiver, which would require review by the City Planning Commission and a recommendation from the local community board, but not the full City Council ULURP trial by fire.

The revised proposal also includes a number of smaller changes. For example, it would encourage active rooftops, with restaurants and observation decks, by exempting them from “stacking rules” that have traditionally forbid such amenities above apartments.

While such changes were made in response to a number of concerns that have been raised since the plan was announced last summer, they are unlikely to smooth the path significantly for what remains a controversial proposal. The rezoning is still likely to face significant opposition from those who worry that the plan does not do enough to fund infrastructure upgrades, an aspect which has remained virtually unrevised in the new plan. Nor are the revisions likely to quiet the opposition of the Municipal Art Society, which has expressed concern about the fate of the area’s historic-but-not-landmarked buildings (and also has a competing proposal for upzoning around Penn Station). Furthermore, the interests pushing for development in Hudson Yard and downtown will not be pleased by the fact that the sunrise provision is still planned to take effect in 2017 (though the new northern landmark transfer area wouldn’t take effect until 2019).