Go west, NYC - Build out midtown now
By Senator Charles Schumer
The New York Post, 5/19/08
IN the information age, office buildings are our factories. Within their walls, every day, ideas and capital are generated in sectors ranging from finance to advertising to publishing to high technology and beyond.
In New York City, we are facing an acute shortage of office space that makes doing business prohibitively expensive, costs jobs and threatens to choke off New York's future growth. With the rebuilding of Ground Zero underway, the next best steps to prepare New York to maintain its preeminence are to overhaul Penn Station and construct a grand Moynihan Station, spurring a Grand Central-like district with 8 million new square feet of office space.
Simultaneously building a multiple-station No. 7 train extension to the Far West Side will set the stage for that district to migrate west.
Consider this: The Grand Central Terminal district has approximately 36 million square feet of Class A office space. The Penn Station area, which serves more commuters daily, has only 6 million. In the part of New York City most suitable to high-density development, there is instead low-rise retail and underutilized mid-size buildings.
As New York's red-hot commercial real-estate market cools, some might have the inclination to put all big projects on hold. Yes, in the first quarter of 2008, the overall vacancy rate in Manhattan ticked up 6.1 percent. But that is still far below the 7 to 9 percent range that puts the office market at equilibrium. Anything below that range, and rents go wild like a runaway train.
Here's a statistic that may surprise you: Cushman and Wakefield has calculated that a worst-case scenario of 50,000 layoffs would raise the overall vacancy rate up to 7.33 percent, which is still the low end of equilibrium. So when New York bounces back - and we always bounce back stronger then ever - a dearth of supply will again drive up prices.
We need to grow, but in this time of constrained credit and dwindling public resources, we must follow the path of least resistance. History shows us that development in this city begins around transportation nodes and then grows block by block. Sixth Avenue and Third Avenue each followed this model.
Development on the Far West Side - a vital part of our future, which I have long supported - isn't likely to happen first, leapfrogging Penn Station development.
So how do we develop the Penn Station district, given all the recent setbacks and pall of doubt that has descended on big-development projects? I believe there are four steps we must take.
* First, project management should be given to the Port Authority. A lack of expertise and money has been the bane of this project, and the Port Authority has both of these in abundance. The agency should use New York's $2 billion share of Port Authority money to make it happen.
* Second, even if Madison Square Garden doesn't move, we can drastically improve Penn Station by relocating 200,000 square feet of Amtrak and NJ Transit operations offsite. Further, MSG has said it would be willing to move the WaMu Theater, which would bring daylight into the train station.
* Third, the money to achieve Sen. Daniel Patrick Moynihan's vision of transforming the Farley Post Office into a magnificent train station is there. One last step, government approval, is needed to move forward. So let's start building.
* Fourth, we should move ahead with creating a special Penn Station zoning subdistrict, allowing for more building and giving more development rights to those who make a contribution to the transportation infrastructure. Additionally, Amtrak and NJ Transit should leverage their real-estate holdings to create new commercial buildings.
Let me be clear: We should develop the Penn Station area and the Far West Side, not one or the other. But the key to developing 10th and 11th avenues in the 30s and 40s is kick-starting Penn Station development; a new transit hub is vital to support and sustain the major development we all hope to achieve in the Penn Station area and beyond. As it's unlikely that we'll see commercial development on the Far West Side for several years until the new No. 7 line is operational, we need to get the Penn area moving first.