Conversion Opportunities
This new development might come through teaching old dogs new tricks.
Take 141 East 44th Street. It was built as a prewar residential building. It was later converted to office space, and the property was renamed Fitzpatrick Grand Central in 1997, and now serves as a 155-room hotel.
Or 636 11th Avenue. In January 2008, advertising company Ogilvy & Mather leased the entire 11-story building. The owner originally wanted to convert the property, a former chocolate factory, to a residential space, but then decided to make it office space, according to Joseph Brancato, a managing principal at architecture and design firm Gensler. “They wanted something cool,” said Mr. Brancato, who was involved in the renovations. “There are things you can do with these older buildings that you can’t do with a Class A office space.”
The building’s location, near the Hudson River and the Eighth Avenue subway lines, was also a boon. The West Side may be an area of great development in the next decade, not merely through Hudson Yards, but also through art galleries in Chelsea and along the High Line. The Chelsea Fine Arts Tower at 545 West 25th Street, a commercial condo completed in 2007, was leased quickly.
If all else fails, a developer can demolish an older building completely and start from scratch. As vacant lots continue to disappear, it may be the only way of creating new space. However, such demolition and redevelopment is costly, both financially and environmentally, especially compared to renovation.
Much of Manhattan also lies within a historic district, which means that any demolitions or significant alterations to a building’s facade must first be approved by the city’s Landmarks Preservation Commission, which is typically a lengthy and controversial process. Even if a company ultimately does gain approval, they often attract the ire of local preservation groups and neighbors.
“Sometimes you need to take a second or third look before you bring in the wrecking ball,” Mr. Brancato said.
Across the River
Between 1986 and the third quarter of 2006, New Jersey’s share of occupied office space in six counties increased from 17.9 percent of the regional market to 22.5 percent, according to a Hudson Yards study by Cushman & Wakefield in November 2006. There was a total of 171.7 million square feet of space in New Jersey as of 2006, divided among tier 1 space in Hudson and Essex counties and tier 2 space in Bergen, Morris, Middlesex and Somerset counties.
Between 1986 and the third quarter of 2006, though Manhattan still had the majority of occupied office space regionally, at 61 percent, it was down from almost 67 percent in 1986. (The remaining 17 percent was divided among Long Island, Westchester and Connecticut.)
The shift across the Hudson can be attributed to a boom in office development in New Jersey in the 1990s, itself a product of generous tax incentives. “It’s devastating to our tax base and our employment base,” said Mr. Chakrabarti of Columbia.
The loss of the World Trade Center also cut into downtown availability. However, since the Sept. 11 attacks, $30 billion has been invested in development in Lower Manhattan, with the World Trade Center site as the centerpiece of new development. “Businesses will not pay an unlimited premium for a New York address,” said Elizabeth Berger, president of the Downtown Alliance. The organization has proposed more tax incentives to attract more development.
Ultimately, New York’s aging office stock is part of the larger issues of the economy, development and preservation. Like the rest of the city, everything is intertwined.
“New York has modern problems,” Mr. Walkowitz of N.Y.U. said, “but they’re built on 18th-century politics and 19th-century infrastructure.”
rli@observer.com
