NYC Midtown Air-Rights Sales May Raise Funds for Transit

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New York City’s plan to encourage taller skyscrapers around Grand Central Terminal may raise about $750 million to improve access to mass transit in the neighborhood through the sale of air rights to developers.

The city would sell so-called district improvement bonuses for $250 per square foot of floor space to developers who would then be allowed to exceed building-height limits, according to a proposal by the Department of City Planning. The money would go to the Metropolitan Transportation Authority to fund staircases, escalators and other improvements to subway stations in the area near the East 42nd Street rail hub.

Mayor Michael Bloomberg is pushing for zoning changes to the east midtown neighborhood, which has some of the most expensive real estate in the city. The plan would allow for towers taller than the 1,046-foot (319-meter) Chrysler Building, which is a block east of Grand Central. New skyscrapers are needed to keep New York competitive with London, Shanghai and other cities that have built more modern high-rises in recent years, according to the mayor, who is founder and majority owner of Bloomberg News parent Bloomberg LP.

“What we hope this will do is lead to Midtown staying Midtown, as the strong commercial core of the region,” Frank Ruchala, a project manager for the city planning department, said last night after a presentation to three affected community boards. “The overall area will be maintained as a commercial district, there will be a handful of new buildings in the area, and through those new buildings there will be improvements to the public realm.”

Pedestrian Plaza

The $750 million is based on estimates by the department of how much could be generated over 20 years. The value of the air rights was determined for the city by Landauer Valuation & Advisory, a unit of commercial property brokerage Newmark Knight Grubb Frank.

The funding is intended to help the neighborhood compensate for the additional congestion bigger buildings would bring, according to the plan. Along with transit improvements, some of the money would go toward making Vanderbilt Avenue, a side street just west of Grand Central and the adjacent MetLife Building, into a pedestrian plaza.

Potential Landmarks

The planning department also released a list of 32 east midtown buildings that are “potentially eligible” for landmark protection. They include SL Green Realty Corp. (SLG)’s 125 Park Ave., also known as the Pershing Square Building, and the Graybar Building; Boston Properties Inc. (BXP)’s 601 Lexington Ave., formerly known as Citigroup Center; and Tishman Speyer Properties LP’s MetLife Building.

In his State of the City message last month, Bloomberg said the rezoning would allow for a “select” number of new buildings, while preserving the district’s historic character. Noting that Grand Central Terminal is a century old this year, the mayor said, “It’s up to us to ensure that the area around it remains a vital part of our city’s growth for the next 100 years.”

The city plans to start a six-month review process for the rezoning next month, with the intent of having the changes in place by the end of the year. At the same time, the Landmarks Preservation Commission is expected to determine which buildings should be protected.

Under the rezoning proposal, properties close to Grand Central, between Madison and Lexington avenues, would be entitled to acquire air rights to build towers as tall as about 900 feet -- about the size of 1 Bryant Park without its spire.

Outside that main area, and including the west side of Madison and the east side of Lexington between East 39th and 49th streets, towers of about 700 feet would be allowed. That’s about the size of the former Bear Stearns building at 383 Madison Ave.

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

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