By Orlando Lee Rodriguez
The Bloomberg administration announced today announced an agreement to sell two city-owned buildings in Lower Manhattan for close to $250 million.
The deal is the first in a series of steps announced by the mayor during his final State of the City address to reduce the amount of city government office space by 1.2 million square feet by 2014.
Finalization of the deal still faces approval by the Manhattan Borough Board.
“In 2010, we set a goal of reducing City agency office space by 10 percent within four years,” said Mayor Bloomberg. “Today’s agreement brings us more than 80 percent towards that goal, making agency operations more efficient and less costly. It will continue the revitalization of Lower Manhattan, stimulate economic development and bring more than $100 million into the City’s treasury.”
With the sale, the city is expected to save approximately $120 million in operating expenses over the next 20 years. The commercial office properties, located at 49-51 Chambers Street and the other at 346 Broadway, sold through a competitive Request for Proposal process for $89 million and $160 million respectively to the Chetrit Group and the Peebles Corporation, one of the largest African-American owned real estate development companies in the country.
Both properties, as per agreements with the city, will be redeveloped for hotel, residential and community uses.
“We are honored by the trust Mayor Bloomberg and the City of New York have placed in us by awarding The Peebles Corporation such a significant and iconic landmark,” said R. Don Peebles, chairman and CEO of The Peebles Corporation. “We have engaged in restoring and reusing landmark buildings for the purpose of historic preservation, economic development [and] job creation.”
The Chetrit Group plans to set aside 16,000 s/f of space at 346 Broadway for a public high tech space to be used for digital art and media.
“A year ago, we raised concerns over the lack of community-oriented uses associated with the Civic Center sale,” said Borough President Scott Stringer.
“Since that time, we have been able to work with Mayor Bloomberg, Deputy Mayor Cas Holloway, DCAS, and EDC to modify the plan in a way that can meet both the City’s fiscal needs and those of the community.”
Collectively, the re-development projects are estimated to create more than $70 million in annual tax revenue for the city. The city is in the process of unloading additional properties because of a reduction in the public workforce.
“The sale of these buildings will help generate much-needed revenue for our City and will cut down on operating expenses,” said City Council Member Margaret Chin, who represents lower Manhattan. “I want to thank Mayor Bloomberg and Deputy Mayor Cas Holloway and offer my support in their drive to make our City’s government more efficient.”
A team from Kramer Levin Naftalis & Frankel represented The Peebles Corporation in the deal for 346 Broadway. Partners James P. Godman and Gary Tarnoff along with special counsels Valerie Campbell, Karen Mintzer, Tzvi Rokeach and associate Inge Hindriks made up the legal team.