Midtown Area (Manhattan, NY)

Latest story

125 Shares199 Views

Taxpayers May Foot Bill for Penn Station Revitalization, Report Says

by

New York State wants to rebuild the transit hub in Midtown Manhattan and pay for the improvements through a larger real estate development.To restore the ailing Pennsylvania Station, both Gov. Kathy Hochul and her predecessor endorsed an extraordinary reimagining of Midtown Manhattan with 10 super-tall skyscrapers — among the largest real estate projects in American history.The ambitious undertaking would be complex but necessary, they said, as the development of new towers would help pay for much-needed improvements at Penn Station, which was, before the pandemic, the busiest train station in the Western Hemisphere and, perhaps, the most universally disliked.But just as New York State is set to approve the project as soon as next month, a new analysis by New York City’s Independent Budget Office has raised serious questions about the financial viability of the development, the state’s role in it and the possibility that taxpayers would have to foot the bill if the revenue its boosters are expecting fails to materialize.Most strikingly, the report concludes, New York State has provided so few financial details about the 18.3-million-square foot project, that it is all but impossible to analyze the plan on the merits. The state’s cost projections have run the gamut from an original estimate of between $30 billion to $40 billion, to an estimate closer to $20 billion, now that the state is no longer bundling the Hudson Tunnel into the same project estimate, it said.The reconstruction of Penn Station would be complete in 2032, before construction would start on half of the towers, largely consisting of office space, demand for which has declined markedly because of the pandemic-induced shift to working from home. The last building would be finished in 2044.During that 12-year gap, the city agency said, revenue from the new buildings’ office leases, hotel rooms, retail and residences may not be enough to pay for the completed transit improvements, which would force taxpayers to cover the bill.“Without this information, it doesn’t seem reasonable to actually be moving on to approving this program,” George Sweeting, the acting director of the Independent Budget Office, the nonpartisan agency that monitors the city budget, said in an interview.A spokesman at the Empire State Development Corporation, the state agency leading the redevelopment, said that the project would not be brought to its board for approval until the financial questions have been resolved. Agency officials said that the city would be protected from financial risk because any shortfalls would be covered by the state.“In addition to cooperating with the I.B.O. on its report, E.S.D. will continue to work with the community, the city, stakeholders and elected officials to ensure their priorities, including a fair financial structure, are in place prior to securing public approval,” the spokesman, Matthew Gorton, said.“We will finally transform the area’s neglected business district, create much-needed affordable housing and social services, vastly enhance the commuter experience and provide a foundation for sustainable growth for the city and the broader region,” he added.Ms. Hochul revised the proposed development plan, which was first introduced by her predecessor, in response to concerns over the size of the project.Cindy Schultz for The New York TimesDespite the report’s findings, a spokesman for Mayor Eric Adams said that his administration was still committed to the state’s redevelopment plan.“We are working constructively with our state partners to advance a project that transforms Penn Station and the surrounding area into the world-class transit hub New Yorkers deserve, in a fiscally responsible way,” the spokesman, Charles Lutvak, said.The report amplifies many of the criticisms that were first raised by elected officials and community leaders when former Gov. Andrew M. Cuomo revealed the full scope of the project a year ago, just months before he resigned amid sexual-assault allegations.It also echoes similar questions about the project’s finances posed by the New York City Planning Commission in a letter in January to Empire State Development.“The project needs to be retired,” said Layla Law-Gisiko, a community board member in Midtown Manhattan who is running to represent the area in the State Assembly. “The rationale for this project to go forward is to generate the revenue. And this particular project is going to be costing money and not producing revenue.”In many ways, the project mirrored Mr. Cuomo’s other efforts to put his imprint on the city, including the renovation of the Moynihan Train Hall across the street from Penn Station and his reconstruction of the city’s major airports in Queens.In this case, the funds from the development would pay for cosmetic improvements at Penn Station, as well as a potential expansion of the station a block south of its current location. New tracks and platforms would add rail capacity along the economically vital corridor connecting commuters in New Jersey to jobs in New York, after a second tunnel is built under the Hudson River.The state would wield its authority to overrule local zoning and planning laws so that developers could build bigger buildings at the site than otherwise allowed. When Ms. Hochul succeeded Mr. Cuomo, she continued the state’s support for the project while making modest changes to appease critics, such as expanding pedestrian pathways and slightly reducing the project’s proposed scale.The report also highlights a key concern from critics: It would largely benefit a single company, Vornado Realty Trust, one of the city’s largest office developers. Vornado owns four sites in the development zone and part of a fifth, and its chief executive, Steven Roth, last year donated the maximum, $69,700, to Ms. Hochul’s campaign.Mr. Roth, along with his family members, also gave Mr. Cuomo about $400,000 in campaign donations before he resigned. State officials and a Vornado spokesman have said the donations did not influence Vornado’s role in the venture. Mr. Roth has called the redevelopment of the Penn Station area Vornado’s “Promised Land.”In an earnings call this week, Mr. Roth reiterated the company’s commitment to the state’s project. “Obviously, we support it,” he said.A Vornado spokesman declined to comment on the record on the report.Despite the state’s multiyear work on the project and its imminent approval, the Independent Budget Office found that the plan lacked a robust analysis of the numerous risks, including the consequences of the shift to remote work and whether the new Penn Station towers could negatively impact Hudson Yards, the enormous development on the far West Side of Manhattan. Hudson Yards opened in 2019 and has a similarly structured tax deal as the proposed Penn Station site.“It’s a flashing yellow light that the Penn Station redevelopment plan at this stage has more questions than answers,” said Brad Hoylman, the State Senator whose district encompasses most of the proposed development. “There are significant risks that the state has not yet addressed.”Officials have not reviewed whether a simple rezoning of the area to spur redevelopment could produce greater economic benefits and property-tax collections than the state’s project, the agency said. Yet, without the state’s proposal, the area is unlikely to entice developers, the agency said, noting the lack of construction in the Penn Station area. And while the mayor is pro-development, such a rezoning would be unlikely to proceed through the current City Council.The state’s proposed financial scheme would suspend additional property taxes on the new towers but require Vornado and other developers to contribute an undetermined share of their revenues to pay down the construction costs at Penn Station.But without financial specifics, the report said, it is not possible to determine whether the developers would pay less to the city and state in this deal than if the new buildings were subject to standard property taxes. And, while the state would still be collecting payments from developers, the city would lose out on extra property-tax revenue that it would have earned under a standard rezoning.While the Penn Station area has not had seen large redevelopment in decades, Vornado executives have explored such projects in the area for years, which the city agency noted “may signal that little additional incentive is needed, if at all, for those sites.”John Kaehny, the executive director of Reinvent Albany, a government watchdog group, said that the Independent Budget Office’s report makes clear that “the project does not stand up under scrutiny.”“It’s an issue of putting a lot of taxpayers at risk for no reason other than helping Vornado,” Mr. Kaehny said. “It just doesn’t make sense from a public-financing and public-policy perspective.” More

More stories

  • 50 Shares169 Views

    in Economy

    Retailers Rethink Pandemic-Battered Manhattan

    by

    Starbucks has closed more than 40 stores, while adding mobile-order pickup counters in others. Other chains like Sonic are taking advantage of vacancies to establish themselves in New York.In the heart of Manhattan’s garment district, a once-busy Starbucks on the corner of Eighth Avenue and 39th Street sits empty. Just down the block, a Dos Toros Taqueria that opened just three years ago is now closed. And Wok to Walk, which once served steaming containers of noodles mixed with chicken and vegetables to a bustling lunch crowd, is also shuttered.While the Delta variant of the coronavirus has again delayed plans by many companies to bring employees back to offices en masse, workers who have been trickling into Midtown are discovering that many of their favorite haunts for a quick cup of coffee and a muffin in the morning or sandwich or salad at lunchtime have disappeared. A number of those that are open are operating at reduced hours or with limited menus.With the pandemic keeping millions of New York City office employees home for the past year, restaurants, coffee shops, apparel retailers and others struggled to stay afloat.By the end of 2020, the number of chain stores in Manhattan — everything from drugstores to clothing retailers to restaurants — had fallen by more than 17 percent from 2019, according to the Center for an Urban Future, a nonprofit research and policy organization.Across Manhattan, the number of available ground-floor stores, normally the domain of busy restaurants and clothing stores, has soared. A quarter of the ground-floor storefronts in Lower Manhattan are available for rent, while about a third are available in Herald Square, according to a report by the real-estate firm Cushman & Wakefield.Starbucks has permanently closed 44 of its 235 locations in Manhattan. It is now adding pickup areas in many stores.Hilary Swift for The New York TimesStarbucks has permanently closed 44 outlets in Manhattan since March of last year. Pret a Manger has reopened only half of the 60 locations it had in New York City before the pandemic. Numerous delicatessens, independent restaurants and smaller local chains have gone dark.“Midtown clearly has been the hardest hit of any of the areas of Manhattan,” said Jeffrey Roseman, a veteran retail real-estate broker with Newmark. “If you think of other office-centric areas, whether all the way downtown or Flatiron or Hudson Yards, there is a lot of residential surrounding those areas that helped sustain those markets. Midtown, for the most part, is a one-trick pony.“It’s mostly offices and hotels, which also took a hit from the downturn in tourism.”The turmoil has reached farther downtown though. Last week, the luxury furniture retailer ABC Carpet & Home — whose flagship store was a fixture of the Union Square area — filed for bankruptcy protection, in part because of “a mass exodus of current and prospective customers leaving the city.”But in a city where one person’s downturn is someone else’s opportunity, some restaurant chains are taking advantage of the record-low retail rents to set up shop or expand their presence in New York City.In the second quarter, food and beverage companies signed 23 new leases in Manhattan, leading apparel retailers, which signed 10 new leases, according to the commercial real estate services firm CBRE.Shake Shack and Popeyes Louisiana Kitchen were among those signing new rental agreements this year. So was the burger chain Sonic, which signed a lease for its first New York City outpost, replacing a Pax Wholesome Foods location in Midtown. The Philippines-based chicken joint Jollibee, which enjoys a committed following, plans to open a massive flagship restaurant in Times Square.Sonic signed a lease for its first New York City outpost, replacing a Pax Wholesome Foods in Midtown.Hilary Swift for The New York TimesStill, with so much uncertainty about when employees may fully return to Midtown offices, some companies are proceeding carefully. The coffee shop Bluestone Lane had plans to expand aggressively into Manhattan before the pandemic and is still considering locations in Midtown. But it has now turned its focus to opening in more residential neighborhoods like Battery Park City, Hudson Yards and Tribeca.“We intentionally selected urban residential areas for our new cafes so we are not dependent on our locals returning to a physical office space, and are well-positioned for the future of hybrid work,” Nick Stone, the founder and chief executive of Bluestone Lane, said in an emailed statement.And some chain restaurants that already have reopened in Midtown are altering their strategies to address what they believe are the changing needs of customers in a post-Covid world.On a recent weekday, a handful of customers were nibbling on salads and sandwiches at the Bryant Park location of Le Pain Quotidien. The long, communal tables that once dominated the front of the restaurant are gone for now, while refrigerated cases for a selection of grab-and-go drinks, salads and sandwiches will be expanded next year as part of a remodeling. A new app to preorder and pick up food became available in May.While the new technologies work for some customers, others long for the past.A Europa Cafe in Times Square closed, one of numerous stores to shutter during the pandemic.Hilary Swift for The New York Times“We used QR codes for guests to look at the menu as we tried to limit the contact of surfaces, but the majority of our guests want to hold a real menu,” said Stephen Smittle, the senior vice president of operations for Le Pain Quotidien. “They very much want to feel normal. They want a server. They want to hold a cup of coffee, not a paper cup.”Struggling before the pandemic, Le Pain Quotidien filed for bankruptcy in May 2020. It was acquired by Aurify Brands, which has since reopened many of the Le Pain Quotidien locations around the city, including several in Midtown.“Our thinking is that Midtown New York will come back to a level that might not be 100 percent prepandemic, but based upon information we have gathered, I do believe that Midtown is going to come back to a prominent level,” Mr. Smittle said.An online-order status board at Starbucks.Hilary Swift for The New York TimesCustomers increasingly like ordering drinks online and then picking up at the store.Hilary Swift for The New York TimesFor Starbucks, one of the big lessons from the pandemic was that customers liked ordering their drinks online and then quickly picking them up at stores or drive-throughs. Starbucks had started to offer that even before the pandemic, opening a pickup location in Midtown’s Pennsylvania Plaza in late 2019.Since early 2020, Starbucks has permanently closed 44 of its 235 locations in Manhattan. But it is in the process of adding mobile pickup areas in many stores and adding more pickup-only locations. The company says that it expects to have net new store growth in Manhattan in the next few years.Before the pandemic, Starbucks operated three stores around the Columbus Circle area. It closed them and this year, opened one large restaurant. Now runners from Central Park pick up their preordered drinks from a mobile counter and head out again, while other customers stand in line to place their orders and can sit at nearby tables.“We were going to build the concept out and evolve over time,” said John Culver, the president of North America and chief operating officer for Starbucks. “What we’ve done is taken the opportunity that the pandemic has presented and accelerated the transformation of our portfolio of stores. Consumer behaviors during the pandemic have accelerated at levels that no one expected.” More

  • 113 Shares169 Views

    in Economy

    ‘We’re Suffering’: How Remote Work Is Killing Manhattan’s Storefronts

    by

    #styln-signup .styln-signup-wrapper { max-width: calc(100% – 40px); width: 600px; margin: 20px auto; padding-bottom: 20px; border-bottom: 1px solid #e2e2e2; } A big shift toward working from home is endangering hundreds of locally owned Manhattan storefronts that have been hanging on, waiting for life to return to the desolate streets of Midtown and the Financial District. The […] More