Approval of new zoning is only the first step in providing developers with the opportunity to redevelop existing properties.
An article by David M. Levitt in Bloomberg’s National Real Estate Investor outlines the ongoing efforts of the City of New York and real estate developers in Manhattan to erect new, larger office buildings in midtown that will help “New York stay competitive with financial capitals such as London and Shanghai.”
The New York City Council is in the process of approving a recommendation of its zoning subcommittee “that would rezone 78 blocks between East 39th and East 57th streets to allow for bigger and taller buildings.”
The City, and developers, want to replace smaller existing buildings with larger, modern office towers. “The plan could pave the way for more than 6 million square feet (560,000 square meters) of new office towers to rejuvenate an aging stock of buildings…”
New zoning statutes are, as Mr. Levitt, points out, just the beginning of a process that will take years to materialize into new buildings.
Developers must, in some cases, purchase multiple adjoining existing properties to create parcels large enough to allow for construction of the planned mega- structures. Often these individual properties are owned by multiple owners. This is expected to create years of negotiation and legal maneuvering.
Once properties of sufficient size have been acquired, “the new rules would generally allow owners to build as much as 18 to 27 times the area of their site, requiring them to buy air rights to achieve the maximums under the law.”
Acquiring these air rights creates another level of negotiation and legal proceedings. Developers “can acquire air rights primarily from two sources: the unused development rights of the many landmarked buildings in the area, or by contributing to a fund to pay for mass-transit improvements at Grand Central Terminal and other subway stations affected by the anticipated higher densities” of the redeveloped areas.
Developers are encouraged by the fact that the City and the Borough of Manhattan are actively working to make redevelopment possible. Also, although not all the present landowners are interested in selling their buildings, owners of structures on a number of the available sites are actively pursuing the sale of their holdings.
As NYC Rezones Midtown Manhattan, New Towers May be a Long Way Off, David M. Levitt, Bloomberg-National Real Estate Investor, reprinted at enr.com, July 7, 2017.