West Side Highway: Developers fill in fringes

Along the West Side Highway, on a waterfront stretch pocked with dive bars, warehouses and truck depots, a makeover is in the works.

The most striking before-and-after example is architect Frank Gehry’s work on the IAC/InterActiveCorp building. The design, with a startling façde reminiscent of billowing sails, transformed a truck garage at 540 West 19th Street into one of the most cutting-edge office spaces in the city.

Some commercial real estate brokers believe there is similar potential for more of Manhattan’s westernmost roadway, which runs along the Hudson River past the 550-acre narrow greenbelt Hudson River Park down to Battery Park City.

They argue that one particular two-mile stretch along the West Side Highway has the greatest development potential in Manhattan. Already, builders are beginning to fill the nooks of industrial areas there with residential and office development.

Extell Development’s plans were revealed last month for a new 1.5-million-square-foot office tower at the site of the Copacabana club on the southeast corner of 34th Street and 11th Avenue. Published reports said the 45- to 50-story building would have 1 million square feet taken by the World Product Center, a showroom for medical equipment.

From 42nd to 57th Streets, development along the waterfront is restricted by city zoning rules. Go north, and the massive Trump Place project dominates from West 59th Street to 72nd Street.

A few miles north of that, Columbia University acquired two more Harlem properties last month, 640 West 132nd Street and 2311 12th Avenue, to the tune of $8 million, to further its plans to expand northward.

Soaring popularity

“Historically, New York always cut off its development from the river — the highway did it, the industrial users did it, outdated zoning did it,” said David Wine, vice chairman of the Related Companies, which has several projects in the works near the West Side Highway, including a condominium on the former site of the Superior Printing Ink Company. The project, luxury residences, will occupy an entire block of West Street between Bethune and 12th streets.

“You’ve seen a helter-skelter approach — and sometimes quite a planned approach in the case of rezoning in Battery Park City — to eastern residential neighborhoods extending west towards the highway and river,” Wine added.

The two-mile stretch along the West Side Highway that some brokers say has top development potential in Manhattan has seen land prices in the area more than double in the past two years, said Eric Anton, an executive director with Eastern Consolidated.

Two years ago, property sold for around $200 per square foot. Now prime properties zoned for residential development can go for $500 to $550 per square foot on block corners or near the High Line, a long- neglected elevated freight railroad being turned into a park.

Prices in this fringe area are approaching the 2004 record set for the most desirable plots in Manhattan, many of which are more centrally located. Land at the site of 15 Central Park West at 62nd Street sold for around $650 a square foot in 2004, then a record price.

Industrial property that has yet to be rezoned for residential use might go for $200 to $300 per square foot, Anton said.

Looming large in developers’ sights are the 20-block zone on the western edge of Chelsea where the High Line is being developed within one or two blocks of the waterfront, and another 20 blocks to the south in the far West Village.

“I would say the West Side from the Village all the way up to the 30s is the new hot neighborhood,” said Anton. “That’s where everybody wants to be, because it’s being recreated, and developers can get decent-size projects going. Besides residential development, I expect to see hotels developed,” he said. “I expect to see maybe some boutique office buildings.”

West Chelsea and the Meatpacking District, neighborhoods known for their art galleries and upscale retail shops, have already seen a few such boutique office projects. All, however, are a block or more away from the highway. The notable exception is the IAC headquarters, designed by Gehry to mirror the wave motion of the river.

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Still, despite that building (and Extell’s recent announcement that it will build an office tower along the highway), there are some practical limitations to building office towers in the area, said Robert Von Ancken, an appraiser and executive managing director at Grubb & Ellis.

“[The IAC Building] is a very unusual building, but it’s difficult to get to,” Von Ancken said. Even the lure of seeing the river from one’s office might not outweigh the other limitations of developing offices in the area, he said. “Waterfront views do make a difference, but they certainly haven’t made that much of a difference Downtown, where the buildings have magnificent
waterfront views, but they’re not getting much higher rents.”

He continued, “Buildings that are on the west or east side of Midtown also have views, but they don’t get the rents of buildings in the Plaza District.”

Developers considering residential projects along the highway, however, may find it easier to capitalize on river views, which typically add a premium of 10 percent or more to the price of an apartment, Von Ancken said.

According to Anton, existing loft buildings near the West Side Highway with river views in prime locations, such as the far West Village, could sell for more than $600 a square foot if they’re ready for conversion to apartments.

“Other stuff that’s kind of mid-block, or doesn’t have views, or it’s dark, goes for more like $400 to $500 a foot,” he said.

Hudson Yards: An opportunity

The northernmost section of Chelsea along the West Side Highway, just below the Jacob K. Javits Convention Center, will soon become the single largest development in the city. It is the home of the Metropolitan Transportation Authority’s 26-acre Hudson Yards site, a former rail yard that runs on the east and west sides of 11th Avenue from 30th to 33rd streets, bordered by the High Line to the south and west.

The site will provide a golden opportunity to create both housing and commercial space for the developer who wins development rights from the city. The Related Companies, Brookfield Properties, Vornado Realty Trust, Tishman Speyer and the Durst Organization were reportedly preparing proposals for the site, which was opened to bids in July (see Major players gobble up Hudson Yards sites).

Wine anticipates a mix of housing and office space to be created in the area.

“New Yorkers really like this idea of walk-to-work, of this 24/7 vitality on the street,” he said. “Everyone envisions that area as a logical place for future growth. New Yorkers like the way you can combine office, residential and entertainment all together.”

Developers with West Side Highway property to the north are watching the process carefully. Through zoning, the city has judiciously guarded the blocks fronting the highway from about 42nd to 57th Street for use as a distribution area with truck depots and warehouses to serve Midtown, said Jon McMillan, director of planning at Rockrose Development, which owns property in the area but has been unable to use all of its development rights. Rockrose developed a two-story shipping center for Federal Express along the highway at 48th and 49th streets; the site is zoned for a 10-story structure, McMillan said.

“We still have unused development rights at the site, but we haven’t been able to find an as-of-right use there, because it’s a manufacturing zone,” he said. “The only uses for that area are trucking uses, and trucking uses want to be on the ground floor or maybe one floor up or one floor down.”

Thus the westward march of residential and commercial development in the 15-block zone has been stopped short just east of 11th Avenue, he said.

“I think if there is a good response to the [city’s request for proposals], which shows that there is strong demand to be all the way over on 12th Avenue for both housing and offices, that will create a lot of pressure on the rest of these areas that aren’t yet zoned for those two uses,” McMillan said.

The eventual extension of the No. 7 subway line from Times Square to the Javits Convention Center will add to that pressure, even though the project could take another five years to complete, Von Ancken said. He said he believes that eventually, residential apartments and hotels will come to the West Side Highway area.

“You’ll see some more hotels besides the one next to the Convention Center,” he said. “And you’ll probably see many, many more apartment buildings, and each one will be 25, 35 or 40 stories.”

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