Sale of City Hall Buildings Snagged
Jotham Sederstrom Oct. 23, 2012, 7:45 a.m.
A city proposal to sell three lower Manhattan buildings, potentially converting 750,000 square feet of outmoded office space into luxury housing or hotels, has run into objections from community representatives in the City Hall area, who argue that the plan should have included provisions for a school, community center or affordable housing.
The City Council’s subcommittee on planning, dispositions and concessions plans a hearing next week on the disposal of the properties at 22 Reade Street and 49-51 Chambers Street. Disposition of the third building in the package, at 346 Broadway, was approved in 1998. Mayor Michael Bloomberg announced the sale in January as part of a drive to make the city more efficient by consolidating its office spaces.
The properties are located in the City Hall submarket, which consists 51 office buildings with an overall vacancy rate of 2.3 percent, the lowest in Manhattan, according to third-quarter data from Cushman & Wakefield. People familiar with the three buildings estimated they could bring in anywhere from $187.5 million to $600 million. Currently, 49-51 Chambers Street and 346 Broadway contain offices for the Board of Corrections, the New York Police Department, the Department of Education and Manhattan Community Board One, while 22 Reade Street is home to the NYC Department of City Planning. The plan is expected to save the city $85 million in capital costs and provide additional net annual benefits of $4.6 million.
A tour of the sites in May attracted representatives from more than 40 real-estate-related companies, including Vornado Realty Trust, Toll Brothers, United American Land LLC, TF Cornerstone, Zar Property NY and Kushner Companies (the last of which is run by Jared Kushner, the owner of The Commercial Observer). A deadline for proposals expired in August.
Community representatives including Borough President Scott Stringer have argued that growth in the residential population in the area has increased the need for public services. Margaret Chin, the District 1 City Council representative, testified at an August Planning Commission hearing that the number of residential units in the area has soared almost 76 percent since 2000. She said the disposition of the three office buildings creates an opportunity to provide new school seats, affordable housing, childhood and senior centers, and work space for artists, among other uses.
“We are all proud of the great strides lower Manhattan has made, but this neighborhood faces significant challenges that are threatening the quality of life, safety, efficiency and viability of this community,” Ms. Chin testified. “This administration cannot in good conscience continue to add thousands of luxury residential units, hotel rooms and tourist amenities without providing for the residents.”
Ms. Chin argued the city moved ahead with its request for proposals “too hastily,” and said that the RFP “must be reissued in consultation with Community Board 1 and must include the creation of a new school in lower Manhattan.”
After hearing testimony from the community board, which voted 39-0 against the plan, and the planning commission, which approved the plan while acknowledging the concerns raised by the opponents, the subcommittee will make its recommendation to the City Council.