By Daniel Geiger
The Metropolitan Transportation Authority has put out a request for proposal to the major real estate services firms in the city seeking consultation on how it can trim its real estate portfolio, a process that could include both the disposition of buildings the authority owns in the city and office space that it occupies.
“We issued the RFP to enable us to procure brokerage services that will help us implement our rightsizing plan once it is finalized, and in the meanwhile to have the benefit of advice from the brokers as we develop and refine the plan,” Kevin Ortiz, a spokesman for the MTA said in a statement.
The RFP had been received by a number of large services companies according to several sources familiar with the request, including Cushman & Wakefield, CB Richard Ellis, and Jones Lang LaSalle among others.
A person who had worked before with the MTA and had viewed the RFP said that it was an unusually open ended solicitation from the authority, which usually seeks bids from real estate brokerage and services companies to handle specific assignments. The MTA’s desire to have a service company help it determine the scope of the work creates the possibility for sweeping changes to the MTA’s real estate portfolio.
“It’s unusual that the agency is taking this wide a look at its real estate,” the source said.
The consultancy has drawn attention from the brokerage industry because of the potential size of the job, which many brokers imagine could grow to include a multitude of transactions if the MTA decides to undertake ambitious goals.
The MTA has been facing large deficits in both its capital and operating budgets and has moved to cut its expenses and also raise fares and tolls. The authority has also sought to pare its real estate expenses as another pathway of savings. Last year, the authority, reached an agreement to lease the West Side rail yards to the Related Companies in a deal that eventually bring the agency $1 billion or more. It also leased 113,000 square feet at 333 West 34th Street, a building owned by the real estate investment trust SL Green, in order to consolidate business services and back office functions, a deal that the MTA said would save it $25 million a year in operating expenses at the time.
Investment sales brokers have been especially excited at the possibility of pitching ideas to the MTA. The authority owns a number of office buildings and other facilities in the city, including its headquarters at 347 Madison Avenue. One broker who is competing for the assignment said that the MTA would be best served by selling that property and either leasing the space back or consolidating elsewhere.
“The layout they have there is just very inefficient, they’ve combined it with other contiguous building’s next door that don’t really link up to the space there,” the person said. “You’ll see the MTA at some point move to sell that asset.”
At a preliminary meeting with the services firms who are competing, the MTA warned that its RFP wouldn’t just be a bonanza for dealmakers hungry for a commission check and that the agency was seeking thoughtful advice.
“If you’re here because you just want to sell our headquarters building, don’t waste our time,” one broker said an MTA official told the field of bidders during the meeting.
