The Real Deal New York

Grand Central owner suing city, SL Green for $1.1B

Andrew Penson says One Vanderbilt zoning deal rendered his air rights worthless

September 29, 2015 11:35AM

1 Vanderbilt in Midtown (inset: Marc Holliday and Andrew Penson)

One Vanderbilt in Midtown (inset: Marc Holliday and Andrew Penson)

At least one New Yorker is very unhappy with the city’s deal to rezone of the so-called “Vanderbilt Corridor,” and allow SL Green Realty to built its One Vanderbilt office tower there.

Behind the story:
SL Green Realty
One Vanderbilt

Andrew Penson, the owner of Grand Central Terminal, is suing the mayor’s office, the City Council and SL Green in the U.S. District Court in Manhattan, demanding $1.1 billion to compensate him for the loss in value of his air rights at the Midtown site.

The lawsuit accuses the city of having granted SL Green the right, “for free,” to build far beyond what zoning at the site allowed, rendering Penson’s Grand Central air rights “worthless,” the New York Times reported.

SL Green reached a deal with the city earlier this year in which the city promised to rezone a five-block stretch near the tower’s site, called the “Vanderbilt Corridor,” in exchange for SL Green’s promise to invest $220 million in public infrastructure improvements in the area.

According to the complaint, the old zoning laws already required SL Green to make these improvements, as well as to buy the air rights.

Penson bought Grand Central for roughly $80 million in 2006. He had planned to sell off his air rights at the building, which the lawsuit alleges are worth $880 per square foot, but failed to reach a deal with SL Green.

The developer’s 65-story, 1,501-square-foot officer tower would not be “sidetracked by frivolous litigation,” said Jonathan Rosen, a spokesperson for the company. [NYT]Ariel Stulberg