The Real Deal New York

Mayor’s Midtown rezoning plan could be KO’d, real estate pros say

Complexities of proposal may kill it or delay effects for decades, according to panelists

September 20, 2012 03:00PM
By Adam Pincus

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From left: (Top) William Macklowe and Christopher Schlank, managing partner of Savanna; L&L Holdings President Robert Lapidus and Leslie Himmel, partner of Himmel + Meringoff Properties; (Bottom) Michael Laginestra, vice chairman of CBRE, and Trinity Real Estate President Jason Pizer

Several Manhattan real estate insiders speaking on a panel this morning poured cold water on an ambitious proposal from Mayor Michael Bloomberg to rezone the aging Midtown East business district —with one executive saying it would never be realized and another predicting any impact would not be felt for 10 or 20 years.

Robert Lapidus, president of L&L Holding, which is planning to develop an office tower at 425 Park Avenue in the middle of the proposed zone, predicted Bloomberg’s attempt to spur Midtown East development would ultimately fail or be so watered down as to have little impact.

“It is a great idea that is not really going to come into fruition,” Lapidus told the audience during one of two panels today presented by commercial real estate publisher Bisnow covering the state of the New York market. “There are a lot of unintended consequences that have not been fully analyzed. Whatever is going to get passed is just not going to be so consequential, which is unfortunate.”

Another panelist, Leslie Himmel, a partner with property owner Himmel + Meringoff, backed the plan but said it would be years before the impact was felt.

“I think it may take a decade or two for an effect to happen. I agree in the short run it may not have a big effect,” she said.

Others on the panel, which took place at the Hilton New York in Midtown, included William Macklowe, CEO of William Macklowe Co., Michael Boxer, managing partner at RCG Longview, Anthony Westreich, CEO of Monday Properties and Christopher Schlank, managing partner at Savanna. The panel was moderated by Ross Moskowitz, a partner with law firm Stroock & Stroock & Lavan.

Bloomberg announced the plan in January as a way to bring new development to the core of Manhattan’s business center, which is now filled with older buildings with small floorplates and aging infrastructure that many large corporations do not want to lease.

The second panel included Michael Laginestra, vice chairman at CBRE Group, Jason Pizer, president of Trinity Real Estate, Greg Kraut, managing director with Avison Young and James Wacht, president of Lee & Associates NY. Jacqueline Weiss, partner at law firm Arent Fox, moderated the panel.

The panelists discussed other topics, such as how to represent a tech firm and how availabilities were expected to surge in the Midtown area.

Highlights included:

• Pizer noted the relatively high activity of tech and new media firms in Midtown South, and pointed out the cultural distinctions between those tenants and the more traditional corporate firms in Midtown. “They use words like ‘dude’ and ‘totally.’ They pound you; they don’t shake your hand. Right now, those are the ones making the space decisions,” Pizer said. “So, for you brokers canvassing tenants, learn to pound.”

• Laginestra said big sections of Midtown could see large increases in availability, because of changes such as Conde Nast’s departure for Lower Manhattan or Time Warner possibly relocating. “There could be million and millions and millions of square feet [coming on the market],” Laginestra said. “If you really look at it, I think Sixth Avenue in Manhattan is under siege.”

• Boxer, speaking of how it was to negotiate his partnership agreement with the famously contrarian Edward Minskoff, president of Edward J. Minskoff Equities, on the new development 51 Astor Place in Greenwich Village, said, “You needed popcorn and a glass of scotch.”

• Schlank, commenting on his upcoming Midtown South sale for between $110 million and $120 million of 386 Park Avenue South, at 27th Street, to William Macklowe Company, ribbed Macklowe and his plan to charge higher rents than Savanna could achieve, which were in the mid-$40s per square foot. “Billy thinks he can get 10 bucks a foot more than we were getting. That’s great. In many ways, fantasy is better than reality. But I am sure Billy will do it,” Schlank said.

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