As the MTA has tried to become a leaner organization over the past few years, we’ve heard repeatedly about its attempts at slimming down its real estate portfolio. The MTA owns or leases a lot more space in this city that most people realize, and a good portion of that space is redundant or underused. So the authority has engaged in a process to identify what it can off-load and what it must keep.
Last April, we heard rumors of a sale of the MTA headquarters building on Madison Ave. in the 40s. A sale today may not be in order, but the MTA is hoping that, by 2014, it will be turning a profit off of its midtown holdings. Reuters has more:
The cash-poor Metropolitan Transportation Authority of New York in the next few months will begin the process of putting its Madison Avenue headquarters in midtown on the market by issuing a Request for Proposals, an official said on Monday…”We expect to vacate possession of these buildings to a developer in 2014 at the latest,” Jeffrey Rosen, director of real estate, said at a finance committee meeting.
…How much the three buildings on Madison Avenue, whose location is highly desirable because it is just two blocks west of Grand Central Terminal, will bring depends on what air rights are transferred to any new office tower expected to be built on the site. Selling the three buildings outright would generate at least $150 million before taking into account the transfer of air rights that would allow a developer to build a higher office tower, the authority estimated in April 2011, when it first announced the buildings would be sold.
New York City zoning laws would allow a “minimum zoning floor area” of 376,575 square feet, the MTA estimated last year. The maximum would be 542,268 square feet, although there might be a possibility to acquire more air rights.
The new twist here concerns direction. While the MTA once debated selling the building, they know want to lease the space it’s on. It may take longer to realize the economic gains from such a set-up, but the authority believes it can make more than $150 million on such an arrangement. If so, that’s shrewd ownership that shows the MTA isn’t just looking for a quick economic fix, as I feared when they first put out feelers for interest in the space.
Of course, I may be getting ahead of myself. The MTA doesn’t plan on signing over the space in any form until 2014, and a lot, as we know, can happen in two years. As this process begins, though, the authority will consolidate its headquarters in space it leases at 2 Broadway, a hop, skip and a jump away from the TA’s once-glorious building at 370 Jay St.
And so the MTA’s real estate world inches toward a consolidation. The authority is still discussing a deal for that Jay St. space with New York City and New York University, and the neighborhood is rooting for such a deal. Now, as the East Side Access project brings a large tunnel to the MTA’s current front door, the authority is eying a move away from Midtown all in the name of economic efficiency. It’s been a long time coming, if it gets here at all.