By Sarah Trefethen
A change in the rules governing building heights around Grand Central Station may spur new construction in one of the city’s oldest business districts.
The Department of City Planning unveiled a new proposal for midtown east at a Community Board 5 committee meeting last night (Wednesday.)
Rumors of a Bloomburg Administration plan to allow bigger, taller office towers in the area between Third and Fifth avenues and East 39th and East 59th streets have circulated for months.
In his state of the city address this year, the mayor referred to “a package of regulatory changes and incentives that will attract new investment, new companies and new jobs” in the neighborhood.
The hope, according to numerous reports, is that permission to build higher will spur property owners to tear down aging building stock and replace it with modern towers.
As it stands today, some of the older structures are larger than would be allowed as new construction, forcing property owners to keep the old building stock or lose their grandfathered square footage. “These buildings are very old, antiquated and not functional,” said Adelaide Polsinelli, a senior director at Eastern Consolidated.
“In order for us to compete on a global scale, they need to be updated.”
The prospect of adding to the total office space in midtown, however, presents a conundrum for investors, she said.“If you increase the space, you increase the supply — are you going to decrease rents?”
“That’s something that’s out there: will the prices come down or will they go up?” But it’s a quest for quality, not quantity, driving the city’s action, according to Fred Cerullo, president and CEO of the Grand Central Partnership, a business improvement district.
He called the yet-to-be released rezoning proposal “one of the most aggressive and exciting proposals to impact this area,” but emphasized that the specific height and floor area requirements are yet to be proposed, let alone argued through the city’s multi-month land use review procedure.
“I think this proposal isn’t just about bigger buildings,” Cerullo said. “This proposal is about updating buildings to be competitive in the 21st century.”
Asking rents for Class A office space in the Grand Central area averaged $56.70 per foot in the second quarter of this year, according to Cushman and Wakefield. That’s well below the midtown average of $71.67, but still higher than the $66.19 per foot average in trendy, tech-heavy midtown south.
For a property owner in the middle of vacating a building, rebuilding might be a cost-effective alternative to renovation, Polsinelli said, allowing a developer to take advantage of modern technology and energy-efficiency standards.
Some of the neighborhood’s aging buildings are already larger than current zoning allows, and Grand Central Station has been the site of a railway station since the late 1800s.
The MTA is currently adding a terminal for the Long Island Rail Road, which will allow commuters better access to the neighborhood already served by Metro North and numerous subway lines.
“This is the center of the city,” Polsinelli said. “Who wouldn’t want to be here.”