Vornado Realty Trust’s studio project on Manhattan’s West Side is the subject of some movie-ready neighborhood drama.
The city has drawn local critics for the concessions it made to Steven Roth’s real estate investment trust to spark the production space project at Pier 94, the New York Times reported. Some are questioning if the city went too far to appease the developer and one economist said the concessions — like a property tax exemption — were unusually high for this type of project.
The city promised $73.5 million to repair and maintain the pier until 2060, when Vornado would take over responsibility for the site. Tenants at other piers in the city are often tasked with maintaining their own properties, potentially costing millions each year.
Vornado’s rent is a mere $4 per square foot, good for $900,000 per year. That would escalate during the life of a 99-year lease, but it would still only top out at $2.8 million per year, which won’t be reached until the 22nd century.
Senior economist Timothy Bartik of the W. E. Upjohn Institute for Employment Research said the city’s concessions work out to about $215,000 per worker over 15 years. The median amount for similar deals across the country is $50,000 per worker.
Among the criticisms are that the prestige location meant the site didn’t need so many incentives attached, as well as Vornado’s previous failure to develop the pier as promised.
“From an economic development standpoint, it’s a giveaway,” Manhattan Community Board 4 chair Jeffrey LeFrancois told the Times.
New York City Economic Development Corporation chief executive officer Andrew Kimball brushed off the criticism, saying the city feels “very good” about the deal, as well as the one linked to the soccer stadium and affordable housing in Queens. Kimball added that the rent is comparable to Steiner Studios’ extension at Sunset Park in Brooklyn.
The EDC selected Vornado to redevelop the existing trade show facility at Pier 94 more than a decade ago. Vornado recently dropped its plans at Pier 92, which was deemed structurally unsound.
— Holden Walter-Warner
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