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Volume 21, Number 13 | The Newspaper of Lower Manhattan | AUGUST 8 - 14, 2008

Mixed Use

By Patrick Hedlund

NYCHA empire
The deficit-plagued New York City Housing Authority has 30 million square feet of development rights in Manhattan, a report by Borough President Scott Stringer has revealed. Through a combination of open space and air rights both inside and adjacent to its existing affordable housing projects, NYCHA currently holds enough development potential for 30 1-million-square-foot skyscrapers — or, for those scoring at home, the equivalent of 11 Empire State Buildings — worth billions of dollars.

“NYCHA needs new revenues to support the buildings that house thousands of residents in Manhattan and around the city,” Stringer said in a press statement. “But selling off development space in hot neighborhoods without a plan and no real public review is not the answer. As a city we need a comprehensive program for how to deal with the asset represented by unused NYCHA development rights — a program that will support the Authority’s operations and also increase the supply of affordable housing for New Yorkers.”

Many of NYCHA’s pre-1961 complexes have large amounts of unused development rights because its buildings were designed with low and moderate heights, and because the complexes’ parking lots and playground spaces sit on “superblocks” that break the street grid. In general, zoning after 1961, although varied from site to site, allows for much taller structures or more buildings than what currently exist.

NYCHA controls nearly 54,000 units in 103 developments in this borough. The authority’s annual budget is $3.5 billion; its preliminary operating budget for fiscal year ’08 reflects a $195.3 million deficit.

Some of that available NYCHA square footage lies on the now-desirable Lower East Side, with many housing projects interspersed among increasingly upscale high-rises in the area. L.E.S. tenant activist Anna Sawaryn sees the announcement as part of a ploy by city government. She cited NYCHA complexes in Chelsea, where affordable housing tied to the Hudson Yards rezoning has been proposed — even though it lies outside the rail yard area.

“The city is already using unused space in some public housing developments to make deals for off-site ‘affordable’ units from other major upzonings,” she said in a letter to Mixed Use. “The resulting deals do not result in a net increase in affordable housing as they use the regular tricks, including setting the percentage of area median income artificially high, limiting the number of affordable units and then sending huge amounts of so-called inclusionary zoning bulk increases back to the upzoned areas.”

Sawaryn added, “It’s a perfect scam for someone like Stringer.”

Stringer and his nemesis, Mayor Mike Bloomberg, would probably get a laugh at any conspiracy theory suggesting the pair are allies.


FiDi flurry
A robust month of leasing activity in the Financial District and Hudson Square has Downtown commercial real estate looking up.

The Financial District alone accounted for 1.04 of the 1.07 million square feet of office leasing activity Downtown in June, with American International Group’s 803,000-square-foot sublease from Goldman Sachs at 180 Maiden Lane leading the way. And with the NYC School Construction Authority’s inking of 140,164 square feet at 26 Broadway, it helped the Downtown area more than double its five-year monthly average for leasing activity, according to a CB Richard Ellis report. (The AIG deal also marked the largest lease in Manhattan this year.)

The Dept. of Ed plans to move a women’s business high school into the space next year and has floated the idea of a 250-seat “incubator” kindergarten space for the Beekman St. school, as developer Bruce Ratner and starchitect Frank Gehry are scrambling to allow the school with its condo tower above to open before September, 2011.

June signings totaling 120,000 square feet in the Hudson Square submarket—part of CB Richard Ellis’ Midtown South study area, including Chelsea, Union Square, Noho/Soho and Tribeca, among others—led to above-average leasing activity for the area.

A lease of more than 80,000 square feet by Cardinal Real Estate at 200 Varick St. helped the upsurge, with Hudson Square/Tribeca accounting for just under a third of the area’s 380,000 total square feet leased, double the submarket’s average. Only the Park Ave. South/Madison Square submarket fared better in the overall study area, according to CBRE.


Renter’s market
With the possibility of a recession freezing many prospective tenants in place, a luxury residential high-rise in the Financial District has decided to waive security deposits for renters with a solid credit history.

The owner/developer of 20 Exchange Place, the 54-floor tower at the corner of William St., won’t require renters with “outstanding” credit to plunk down an up-front deposit.

“With all the expenses and extra stress associated with moving, this initiative saves our renters some of the costs and headache,” Jack Berman, vice president of Metro Loft Management, said in a press release.

The building—with about 150 units currently and the possibility of 500 total when the entire tower is developed—has studios to two-bedrooms available inside the former City Bank Farmers Trust Building.

Many developments have been looking to spur sales amid the economic downturn, especially in Lower Manhattan, given the abundance of new units and Wall St. layoffs. Incentives like a month’s free rent or the waiving of fees for paid amenities have become more commonplace to lure new residents.


Selling Chinatown
A square-block Chinatown commercial property on Canal St. with upwards of 80,000 square feet of retail space will hit the market after it was announced last week the longtime family-owned site had secured an exclusive selling agent.

The real estate management firm Helmsley Spear was picked by the Terranova family to secure a long-term, ground-floor lease for the triangular plot, which has frontage on Canal, Centre, Baxter and Walker Sts. on the Soho/Little Italy border.

Existing improvements consist of three retail and commercial loft buildings totaling approximately 53,000 square feet, as well an existing oversized billboard sign on the Baxter St. building façade. The total permitted rentable area is approximately 82,000 square feet, and the buildings will be delivered substantially vacant. The site sits in an M1-5 zone, which permits as-of-right use for retail, office, hotel and billboard signage. 

mixeduse@communitymediallc.com





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