The Real Deal New York

Manhattan BP Brewer recommends lowering minimum price of Midtown East air rights

REBNY also felt floor price of $393 psf was too high
By Kathryn Brenzel | April 13, 2017 04:18PM

Gail Brewer and Midtown East

It’s rare that the Manhattan Borough President and the Real Estate Board of New York see eye-to-eye. But the two seem to share at least some common ground when it comes to the proposed price of landmarked air rights in Midtown East. Both agree that the minimum prices should be lower (if they exist at all).

Gail Brewer recommended on Thursday — based on estimations by Cushman & Wakefield — that the city lower the minimum price set for air rights to $250 per square foot, rather than the current $393.

“It is essential that we err, if at all, on the side that will not choke off the transactions upon which a significant pillar of this proposal is based and if the City cannot come up with a re-evaluation that inspires more confidence it may have to search for another mechanism to address the transparency and predictability concerns of the Public Realm Improvement Fund,” Brewer wrote.

The recommendation was included in her official comments on the proposal to rezone Midtown East, which is expected to add 6.5 million square feet of new office space to the district in the next two decades. REBNY and owners of the 3.6 million square feet of air rights have been very vocal in their concern that setting a floor price might discourage deals. The city has proposed taking $78.60 per square foot from any of these air rights transfer and putting the funds into public improvement projects.

Brewer also requested the Department of City Planning to up its requirements when it comes to above-grade public space. DCP has dedicated upfront funding for four projects and is studying whether sites benefiting from the rezoning of 40,000 square feet or more should automatically be required to provide outdoor public space.

The borough president also notes that the Pfizer Headquarters site should automatically be required to contribute to the public realm improvement fund if its density is increased. The Pfizer site is unique in that it currently has an allowed floor area ratio (FAR) of 10 rather than a FAR of 15. As the rezoning proposal currently stands, the site wouldn’t necessarily be required to contribute to the public improvement fund.

Brewer also advocates removing residential buildings on the East Side of Third Avenue from the district, citing the expansion of the Second Avenue subway and the pressure it will put on the area to maintain its residential character.

The Manhattan borough board approved the rezoning proposal in March.