New York’s Aging Buildings

flatiron building 1 New York’s Aging Buildings

If the Flatiron Building were a person, it would be dead by now (and so probably would its children). The Chrysler and the Empire State buildings would be getting there.

The nation’s No. 1 business hub, in fact, groans under the weight of a particularly geriatric commercial building stock, by national and even regional measures, a ceaseless reality that presents challenges-and the odd opportunity-for Manhattan landlords, brokers and service firms, not to mention for the city at large in its seemingly eternal struggle to keep firms from skipping to Jersey or (egad!) Connecticut.

The average larger midtown commercial building is 57 years old, nine years older than the president of the United States; the average midtown south one is a cheek-pinching 92; and downtown, it’s 63, according to data from CB Richard Ellis Research, based on buildings measuring over 75,000 square feet in midtown south and downtown, and over 150,000 square feet in midtown.

The majority of these buildings-55.1 percent in midtown, 93.7 percent in midtown south and 55.5 percent in downtown-are over 50, just old enough to remember Idlewild Airport but too young to have seen the Brooklyn Dodgers.

Still. Old. And getting older.


As Went Technology

The modern skyscraper is indebted to technology. Historically, buildings did not rise above five stories until the invention of the elevator in 1850, according to Daniel Walkowitz, a professor of history at New York University and president of the General Society of Mechanics and Tradesmen.

The invention of structured steel in the 1850s also allowed taller, heavier buildings to be supported. Art Deco-style buildings in the 1920s to 1940s were built with aluminum and stainless steel. Modernist architecture uses iron, steel and glass.

New York’s history influences its architecture. It is younger than London and Paris (and much younger than, say, Jerusalem or Beijing) and was never significantly demolished and rebuilt, like Berlin or Tokyo, said Mr. Walkowitz. Nor did it develop rapidly in the post-World War II era with the aid of new technology, like Phoenix or Houston. Thus, it is a city with some of the oldest infrastructure in the entire country.

That infrastructure’s age is not limited to office buildings, either. According to the Bloomberg administration’s PlaNYC, by 2030, almost 70 percent of the power plants that supply the city will be more than 50 years old. By 2030, the water infrastructure will be over 100. Sip on that.


Out With the Old …

This older commercial stock may spur new development, as tenants demand new technology and greener features.

“It’s going to push forward all the big development projects that are stalled at the moment,” said Vishaan Chakrabarti, director of the real estate development program at Columbia University’s architecture and planning school, and the onetime executive, on behalf of Vornado Realty and the Related Companies, in charge of the oft-planned Moynihan Station transit hub over the current Penn Station. He cites Hudson Yards and the World Trade Center site as major development areas over the next decade.

“I don’t think the aging stock, in and of itself, is a problem,” Mr. Chakrabarti said. “The current obsolete stock is just an awful lot that’s very similar to each other.”

Older office buildings generally have larger, pre-Web floor plates, which are usually unsuitable for modern, smaller companies, or simply not economically advantageous. Older buildings may also lack the heating, plumbing and new technologies that make newer buildings more energy efficient. “I think it’s a no-brainer that you’ve got to do it LEED-certified,” said Stephen Siegel, CB Richard Ellis’ global brokerage chairman and a legendary commercial dealmaker. “It can be a windfall.”

Malkin Holdings started a revamp of the Empire State Building right around the iconic tower’s 75th birthday, in 2006, in an effort to make it greener and more attractive to tech-savvy companies. “In the building itself, even back in 1980, you had the long hallways, which seemed to have hundreds of doors on them, and it seemed as though it was a terrazzo floor and fluorescent overhead lights and most had frosted glass windows and gold lettering on them,” Anthony Malkin, president of Malkin Holdings, told The Commercial Observer in January. “And it looked like a combination of a hotel and an episode of The Twilight Zone.”

Demand for new, green buildings also has much to do with business realities. “As the job market comes around and employment returns, there is going to be a very significant need for new, state-of-the-art buildings,” said Robert Knakal, chairman of investment-sales firm Massey Knakal, referring to the inevitable end of the Great Recession.

“The impetus to build new buildings is based on economic incentive,” Mr. Knakal added. “I think the challenge for city planning is finding a balance between preserving the historic nature of the city while allowing for well-conceived and much-needed new development.”


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.”

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