With 14 Fortune 500 headquarters clustered in the office towers on midtown's east side near Grand Central Terminal—the greatest density of such companies in the U.S.—the area looms large in the international business world.
City officials are set to release details this week of the proposal to upzone the area with 80 million square feet of office space. City officials haven't determined the size limits on new buildings, although discussions considered expansions ranging from 22% to more than 100% greater than what's now allowed, depending on location and current zoning. The larger sizes would likely be allowed only on midtown avenues and on the streets closest to Grand Central, which sits beneath more than 1 million square feet of unused air rights.
The hope is that the rezoning will trigger the building of enough new Class A towers to keep the city competitive in the global market for top talent and industry in the coming decades. Such buildings could include features like high-ceilinged, column-free floor plans and plentiful sources of power to run high-tech operations.
The administration has been working diligently on the rezoning proposal so it can be completed before pro-development Mayor Michael Bloomberg leaves office in January 2014.
There will need to be serious financial incentives for property owners to take advantage of the new rules for midtown east, but that's a separate discussion from the rezoning plans.
In a preliminary study, the Department of City Planning defined the midtown east area in its broadest terms as stretching from East 39th to East 57th streets between Second and Fifth avenues. The proposed rezoning district wouldn't be a perfect rectangle, however, since the most densely populated residential niches would be excluded. For example, the upzoned area from East 48th to East 57th streets would extend east only as far as Third Avenue. The plan will be presented to two community boards this week.
Only two new office buildings have been constructed in the midtown east zone in recent years: 300 and 510 Madison Ave. The average age of buildings in the zone is 73 years, with 80% of the structures older than 50. In contrast, the average age of a London office building is 43; in Chicago's Loop, less than 50% of the buildings are older than 40.
The city's zoning rules determine a crucial development yardstick called a floor-to-area ratio, or FAR, which ultimately determines the size of a building that can be constructed on a site. In midtown east, some vintage towers built before the current zoning went into effect in 1961 exceed what could be built there now. That means if a property owner demolished one of them, only a smaller property could replace it. To help reverse that development disincentive, sources said the planning department had discussed raising the areas FAR to 18 to 26 from the current 12 to 15.
It's possible that buildings in midtown east could grow even larger than what the city's revised zoning permits. That's because there are 1.35 million square feet of unused air rights above Grand Central that developers could conceivably buy to boost the size of their buildings.
It was unclear how much it might cost to purchase the air rights above the commuter terminal—or how the money would be used.
Community activists fear that larger office buildings housing even more workers will put more pressure on already-stretched city services. For example, the East 51st Street subway platform is narrow and already overcrowded. To activists, how the city plans to handle increased demand for services such as trash removal, electricity and police protection generated by having larger buildings, is of great concern.
However, supporters of supersizing midtown's real estate potential say their efforts make sense because billions of dollars are being spent to improve transportation in the area by building the Second Avenue subway and extending the Long Island Rail Road into Grand Central.
Rezoning alone would not spark a mad dash for the wrecking balls. Property owners need deep pockets to go without rent revenue for several years as they empty a building of tenants, demolish the structure, rebuild bigger and better, then lease the place anew. Most owners likely will be content keeping their solid if stodgy midtown properties as they are.
Although, it could be 10 years before we start to see effects of the project upzoning, some midtown buildings could take swifter advantage of the new zoning opportunities than others could. L&L Holding has said it plans to tear down 425 Park Ave. after tenants' leases expire in 2015, for instance.
Advertising agency Y&R owns and occupies all of 285 Madison Ave., which is for sale. A new owner could opt to tear down the 1920s-era structure, where a woman died last year in a grisly elevator accident, and start over.
