24 Hour Local Real Estate News

East Midtown Rezoning Plan Gets Key Council Nod

The East Midtown rezoning plan could foster 6.5 million square feet of new commercial development. The East Midtown rezoning plan could foster 6.5 million square feet of new commercial development.

NEW YORK CITY—The much anticipated East Midtown rezoning proposal took a major step forward on Thursday when the Subcommittee on Zoning and Franchises unanimously approved the plan that seeks to unlock a potential 6.5 million square feet of new commercial development in the next 20 years in a nearly 78-block area around Grand Central station.

The East Midtown zoning changes would allow developers and property owners to build taller new buildings in Midtown East near and around Grand Central Terminal in exchange for public improvements, including funding for infrastructure. New as-of-right densities for the newly created East Midtown sub-district that encompasses Grand Central call for higher permitted FARs (floor area ratios) near the terminal and for other transit nodes in the area. The rezoning looks to help make the East Midtown be competitive with other areas of the city since many of the buildings in the area are 75-years-of-age or older and do not provide the amenities many of today’s commercial tenants demand.

Proponents of the rezoning plan say when implemented the East Midtown area will benefit from hundreds of millions of dollars for public improvements as buildings come online, including a $50-million upfront investment from the city. The plan also calls for: the conversion of 43rd Street between Third and Lexington avenues into a “shared street” with new public space; the improvement of area subways in connection with new developments with approximately $500 million of projected improvements funded by real estate investment as new office buildings are constructed. The plan would allow area landmarks to sell 3.6 million square feet of unused air rights, and use proceeds to renovate historic structures. The new regulations would require the larger new buildings to include privately owned public spaces on site.

A portion of dollars from each air rights sale would go towards the public realm improvement fund. Specifically, minimum contributions must be either $61.49-per-square-foot or 20%—whichever is higher. As more sales occur and more buildings are developed, the fund is expected to collect nearly $350 million to be used solely on public realm improvements in East Midtown. The new development is expected to create 28,000 new permanent jobs and more than 23,000 construction jobs over the next 20 years. With the subcommittee’s unanimous vote, odds are very good that approval by the full City Council could come next month.

Among some of the key changes to the original proposal include excluding several blocks of Third Avenue from the plan to address concerns from the Turtle Bay community and requiring 75 feet of minimum street frontage for buildings taking advantage of the zoning.

After the vote, City Council Member Dan Garodnick joined other city leaders on the steps of City Hall to promote the merits of the East Midtown rezoning initiative. Gardonick, who along with Manhattan Borough president Gale A. Brewer co-chaired the East Midtown Steering Committee, said, “East Midtown is back, it’s full of optimism, and open for business. With this rezoning, we are delivering a framework that will unlock development while delivering extraordinary benefits to the public. We are not only enabling Class A office spaces, but we are also creating a Class A office district to go with them.”

Calling it a victory for everyone who lives and works in East Midtown, Manhattan Borough President Brewer said, “Putting all the stakeholders around a table before the plan was certified meant we could forge consensus on a sound blueprint for East Midtown’s future. This plan, based on that blueprint, will spur new, state-of-the-art office construction, attract jobs, and deliver major investments in transit and street-level infrastructure, open space, and local landmarks.”

Two major New York City business trade organizations were split on the legislation approved by the council subcommittee.

In a prepared statement, Real Estate Board of New York president John Banks said, “The agreement between the mayor’s office and the City Council’s Subcommittee on Zoning and Franchises regarding the Greater East Midtown Rezoning proposal is a step backwards in the on-going effort the ensure Midtown Manhattan’s position as a premier global office district. The rezoning of Greater East Midtown has been premised on the strategy that new commercial development should help pay for much needed public improvements.”

He added, “Today’s agreement is a missed opportunity to ensure more, rather than less, commercial development. As a result, it is less likely that the public improvements that are needed in Greater East Midtown will be achieved.”

Carlo A. Scissura, president and CEO of the New York Building Congress, was much more positive about the rezoning plan. “The future of East Midtown is much brighter thanks to today’s agreement by the City Council to move forward on a finalized rezoning plan for this vital Manhattan business district.”

He added that the agreement “will pave the way for a new generation of signature office towers while also attracting substantial private sector investment in the area’s transportation network and public spaces.”

New York City Economic Development Corp. president James Patchett called the rezoning plan “a game changer” for the city’s economy.” He noted, “By creating new and modern space to attract the jobs of the future, the rezoning delivers on a key component of New York Works, our strategy to create 100,000 good-paying jobs over the next decade. Today’s approval is a major step, and we look forward to a vote by the full City Council next week.”

Copyright 2017. ALM Media Properties, LLC. All rights reserved.