On Fulton St. and capturing value from transit propertiesBy
Here’s an interesting bit from Crain’s New York on the impact the Fulton St. Transit Center is having on Lower Manhattan real estate. It’s transit-oriented development at its finest within the five boroughs of New York, and it makes me wonder if the MTA is leaving some opportunities on the table. Daniel Geiger has this to say:
As the Fulton Center, the oculus-topped financial district transit hub and shopping destination nears completion, and as lower Manhattan gains in popularity among budget-conscious tenants, investors are seeing opportunity on William Street…
Real estate experts say that the area’s mix of both potential and value are driving the sales activity. The Fulton Center promises to bring in new retailers when it opens next year and convenient access to the neighborhood’s myriad subway lines—amenities that could pull in office tenants. Despite those prospect, commercial real estate values along the corridor have hovered in the $300s per square, at least a third of what office buildings go for in other neighborhoods, including midtown, where prices per square foot top $1,000.
“William Street is increasingly becoming recognized,” said Brad Gerla, a broker with CBRE Group who specializes in downtown leasing and is the leasing agent for 156 William St. “You’re very close to the new transit hub, it has an incredible residential community in the area and it’s an easy hop to the FDR. Tenants are attracted to all of those attributes.”
The Transit Center will open in June after years of setbacks, budget increases and construction, and already, it’s serving as an anchor in an neighborhood low on anchors. Although the Lower Manhattan area isn’t lacking for transit access, it hasn’t had a cohesive focal point, and the Transit Center seems poised to deliver. We’ll know at some point what the retail spaces will deliver, and the MTA has simplified getting to and around the perplexing Fulton St. complex.
So what’s the missed opportunity? For one, the Fulton St. Transit Center will be a sight to see, but it’s going to be all of four stories tall in a neighborhood surrounded by giant skyscrapers. The MTA could have pursued a development deal that led to the creation of a much bigger building at the spot, but held back in favor of what amounts to a fancy headhouse for a subway station. Imagine the revenue that could have been realized with a comprehensive plan to develop a Time Warner Center-like building with high-end retail on the lower levels and residential higher up atop a very popular subway station.
If this sounds familiar, well, perhaps it is reminiscent of what Jay Walder said of Hong Kong a few weeks ago. In a speech at the Kennedy School, Walder spoke of the MTR’s approach to development. “The development of Hong Kong’s rail system,” he said, “has largely been supported by the granting of development rights for the properties that are adjacent to the railway.” For an agency short on cash, the opportunities are staring it in the face.