Midtown East Still Central to NYC’s Success
Midtown East is a critical contributor to the strength of the New York City office market. That was the clear message from SL Green CEO Marc Holliday and William Rudin, vice chair and CEO of Rudin Management Company, during EisnerAmper’s and Bloomberg’s Real Estate at a Crossroads event at Bloomberg’s headquarters on June 22.
Holliday, the keynote speaker at the event, pointed out that the district houses more Fortune 500 companies than any district in the world. “You can’t replicate what’s in this area,” said Rudin, who praised its restaurants, culture, hotels, residential properties, transportation, and infrastructure both existing and planned.
SL Green believes so strongly in the district that it focuses solely on a one-mile radius surrounding the REIT’s office at 420 Lexington Avenue. The firm’s confidence in the neighborhood’s future also led it to undertake its ambitious development at One Vanderbilt, despite the many challenges involved in getting it off the ground.
The process required SL Green to “break all the rules,” said Holliday. Such “rules,” which are largely subscribed to by the real estate community, include:
- Don’t build on spec
- Don’t spend a lot of money on high design
- Don’t base a project on attaining rental rates that would be considered top-of-market rents to match a top-of-market building
- Don’t design without a residential component
- Don’t deviate from as-of-right zoning
But the results should justify the heavy investments of time and money associated with the rule-breaking. The project addresses two problems faced by the Midtown East district: buildings that are on average 75 years old – “too old” in Holliday’s opinion – and infrastructure that Holliday describes as “in dire need of repair.” In regard to the transportation improvements that SL Green is spearheading as part of the One Vanderbilt project, Holliday stated: “I don’t think there’s a better example of transit-oriented development out there that seamlessly integrates new construction with existing transportation.”
SL Green is not the only owner committed to area improvements. “There are billions of dollars of reinvestment going on,” said Rudin, who mentioned several significant projects being undertaken by such entities as L&L, Boston Properties, Blackstone, Fisher Brothers, and Soho Properties.