The former site of Rheingold Brewery in Brooklyn, which a a developer is seeking to have rezoned for residential units.
Tina Fineberg for The New York Times
A Brooklyn property that POKO Partners wants to rezone.
Property developers generally earn their money by putting up new buildings, but when the real estate market cools, making it difficult to obtain financing, they often look for other ways to help turn a profit.
Some developers — and their real estate lawyers — say that rezoning property is one of them. Juan D. Reyes III, a partner in the law firm of Riker, Danzig, Scherer, Hyland & Peretti, said he had clients seeking zoning changes with hopes of developing or selling the property once the market improves. This particularly applies in areas zoned for manufacturing.
“In the height of the market, a lot of developers just wanted to buy it, develop it and get out,” he said.
Getting a change in zoning, however, can be time consuming. “With zoning, even if you’re doing a variance, it’s a minimum of a year,” he said. “A rezoning can take two to three years. Now is a good time to be doing that.”
Because obtaining any kind of discretionary city approval can take time and resources, developers may shy away from doing it during a go-go market, said Mitch Korbey, a lawyer with the firm of Herrick Feinstein.
“Their focus is often elsewhere, on other projects, for a variety of reasons,” he said.
But when the real estate market comes to a virtual halt, as it has currently, many developers cannot get development financing on favorable terms. An attractive option is to wait out the torpid market while trying to add value to their property with a rezoning, Mr. Korbey said.
Herrick Feinstein has several clients doing just that, specifically on properties zoned for manufacturing. “These are areas that are not zoned in a way that permits residential, because you can’t do residential development in a manufacturing zone,” he said. “Yet residential is nearby, and you’ve got a manufacturing zone that’s not so productive, that’s not generating income, that’s adding very few jobs.”
Mr. Korbey said he was currently handling a case involving several blocks of contiguous vacant lots and warehouses that were once part of a Rheingold brewery in the Bushwick neighborhood of Brooklyn. The developers, Forest Lots L.L.C., recently applied for a zoning change to permit hundreds of residential units and retail development.
“We’re at the beginning of a process that’s going to require an environmental review and public input,” Mr. Korbey said.
The developers are gambling that they will get the rezoning as the real estate market picks up, making their land ripe for development.
Though the developers want to build, another option would be to sell the land — most likely at a premium, Mr. Korbey said. “Obviously, there’s tremendous upside to changing the rules to allow new low- and medium-density housing,” he said.
During a sluggish market, the city may be more willing to approve zoning changes, said Stuart M. Saft, a partner with the firm of Dewey & LeBoeuf.
“The city’s tax revenues fall during a recessionary market, and what the city is looking for is increased taxes,” he said. “If the zoning change will improve the value of the property after the building is constructed, the city will get an increase.”
Lawyers said that developers who seek rezonings when the market is troubled have typically owned their land for a while. Often, while developers were otherwise occupied in a flourishing market, the land was earning income as a parking lot or a one-story “taxpayer” (so-called because the revenues pay the property taxes).
Though not unheard-of, it is rare for developers to buy land in a slow market with the aim of getting it rezoned, said Gary Tarnoff, a partner at Kramer, Levin, Naftalis & Frankel.
“As far as buying a piece of vacant land in a down market and seeking a rezoning in the hopes that the market will turn by the time that they’re ready to develop it, I can’t think of any instances of this during this economic cycle,” he said.
But there are some developers — those who build affordable housing — who routinely use this strategy in both hot and cold markets. “It’s cheaper to buy property that’s zoned in a way that undervalues the real estate,” said Ken Olson, president of POKO Partners, a development company that specializes in affordable housing. “You’re willing to accept some level of risk, because you could go through the city’s planning process and be denied.”
POKO recently filed for a variance on two lots zoned for manufacturing and commercial use on Broadway in Bushwick. Mr. Olson said he hoped to develop both affordable housing and commercial space.
“We’ve done it before,” he said. “If you find the right location — that being a place where City Planning and the community support the idea of creating housing — it’s a good strategy.”
As the real estate market flags, market-rate housing developers are adopting the same strategy, said Randolph H. Gerner, a principal at Gerner Kronick & Valcarcel, an architecture firm that does site planning for developers.
Mr. Gerner said he was seeing developers form alliances with landowners to get parcels rezoned. His firm is handling one such case involving a swath of industrial land in Sunnyside in Queens.
When the real estate market was roaring, “if you couldn’t get something done quickly, developers weren’t doing it,” he said. “Now, they’re saying, ‘It’s going to be a down cycle, but let me prepare for when demand will increase.’
“People are using this opportunity to spend the two years that it takes to seek relief from zoning,” he said.
William Procida, a longtime Bronx developer serving as restructuring adviser to mortgage companies, said developers should use the quieter market to get all their discretionary approvals, not just rezonings.
He said, however, that when the real estate market returns, it may be hard to predict what will be in demand. “When you go get your approvals, make sure they’re for the right thing,” he said. “Somebody with a warehouse approved for high-rise mixed-use, it actually might be worth more in the next 10 years as a warehouse than as condos. Or maybe that residential land will be worth more with fewer units.
“It’s not just upzoning that’s lucrative,” he said, meaning the addition of more units or higher buildings. “Depending on the market, sometimes it’s downzoning.”
HOUSTON AT PITT STREET A rendering of the Lee, which plans mostly studios.
MONTHS may pass before the city’s planning commission decides on a 111-block rezoning of the East Village and the Lower East Side. That rezoning could allow for larger buildings on the neighborhoods’ major streets.
But the connective tissue between the neighborhoods, East Houston Street, is already showing signs of change, as for-sale signs go up and buildings fall — whether because of the proposed rezoning or despite it.
The Lee, for example, is a 12-story glass-and-masonry tower rising at Pitt Street on the site of a former boys’ club. Its nearly 100,000 square feet of space will hold 263 rental units, almost all studios.
In recent years, rentals on East Houston, like the hulking Avalon Chrystie Place and the Ludlow, have catered to the luxury market. But even if the Lee does have similarly large dimensions, as an “affordable” complex it is intended for quite different tenants.
For 105 of the units, the rent will be about $700 a month if the renter moves in from a nearby location and earns no more than 60 percent of the median income, or about $30,000, said David Beer, a director of Common Ground, a nonprofit group based in Manhattan and the Lee’s developer. Applications will be accepted starting in January.
There are also 104 apartments reserved for homeless people struggling with mental illnesses. Rents will most likely be a few hundred dollars a month, or 30 percent of a tenants’ income, Mr. Beer said. The remaining 54 units will go to young adults transitioning out of foster homes, he said.
The $59 million cost of the project, which will be completed next spring, is being borne mostly by the city and state, according to Mr. Beer.
Common Ground has never in its 17-year history built a new facility in Manhattan, but the opportunity comes not a moment too soon, Mr. Beer said. “Most affordable housing is created in outer boroughs, but there’s a critical need in affluent areas as well,” he said.
Because the Lee offers on-site substance-abuse counseling and job training, it earned zoning leeway to be larger than a typical new building. That leeway would mostly be preserved for buildings that go up under the new zoning. There would also be a similar stipulation allowing bigger-than-normal buildings for developers who created affordable housing under the same roof, or close by.
The developers of a proposed 12-story 160-unit apartment at the corner of Avenue D, which was in the demolition phase last week, also hope to avail themselves of this zoning stipulation.
Tony Labozzetta, a spokesman for the as-yet-unnamed project and a principal at Wall Street Realty Capital, which is lining up financing, expressed willingness to include more affordable units than the 20 percent that the new zoning would require — in part to improve the chances of buying an adjacent lot owned by the city. He added that without the rezoning, the project would most likely be dead.
While affordable-housing incentives may read well on paper, they are often ineffectual, critics say, especially when they’re not required but optional, as is the case here. “There’s no guarantee it will be built,” said Susan Howard, an activist with the Coalition to Protect Chinatown and the Lower East Side.
Ms. Howard said that similar incentives had produced only 600 affordable units in New York in the last 20 years, far fewer than in comparably sized cities. “It hasn’t worked,” she said.
The grand plan to bring the headquarters for Major League Baseball’s new cable television network to East Harlem is unraveling, real estate executives and government officials said on Friday.
The MLB Network, which is scheduled to begin broadcasting to 50 million subscribers in January, was to be the anchor tenant in what was originally to be a new 21-story office building at 125th Street and Park Avenue, a short distance from Yankee Stadium and players who would be among its guests.
Now baseball executives are balking at new lease terms proposed by the developer, Vornado Realty Trust, that would have required them to take additional space and pay $2 million a year more in rent, said real estate executives and government officials who spoke on the condition of anonymity because they are involved in the negotiations.
That has placed the future of the entire building, which was to be the first office tower built on 125th Street in three decades, in jeopardy.
The MLB Network, in turn, is reconsidering its own plans. It is operating out of temporary quarters in the old MSNBC studios in Secaucus, N.J., not far from Giants Stadium and the National Basketball Association’s network studios. The baseball network is now assessing whether to stay in Secaucus, rather than moving to Harlem in a couple of years.
The $435 million project began running into trouble virtually from the time it was announced in January. Unable to obtain financing or additional tenants, Vornado scaled down its plans earlier this summer, proposing a 14-story building and a new lease with Major League Baseball.
Both sides in the negotiations, as well as city and state officials, are hoping to salvage the deal, which they had hailed as an important commercial catalyst for the Harlem renaissance. With or without Major League Baseball, some officials say, the tower may still be built.
“We’re working hard to put this back on track as an important project for our city and this area,” said Steven Roth, Vornado’s chairman.
Seth W. Pinsky, president of the city’s Economic Development Corporation, said, “We remain committed to working with all the parties and seeing development at the site and along 125th Street in the near future.”
Matt Bourne, a spokesman for Major League Baseball, declined to comment, except to say, “Any negotiations we have are and remain a private matter.”
During the recent real estate boom, developers have pushed into Harlem with new residential projects and retail malls. Two hotels are in the planning stages, and earlier this year the city rezoned 125th Street for development, with an emphasis on arts and entertainment.
City and state officials have been eager to help Vornado build the office tower, called Harlem Park, and lure the MLB Network to it, offering a package of tax breaks, tax-free financing and loans. “This would catalyze 125th Street as a major corridor,” said Kenneth J. Knuckles, chief executive of the Upper Manhattan Empowerment Zone Development Corporation. “Over time, certainly when the economy turns around, you could see other kindred uses coming to 125th Street.”
An earlier version of the plan announced by Gov. George E. Pataki and Mayor Michael R. Bloomberg in 2005 called for a different developer to build a $236 million hotel on the site. But that project stalled, and Vornado, one of the city’s biggest commercial landlords, took it over last year.
In January, Vornado said it would build a 21-story luminescent tower of glass cubes, with the MLB Network taking about 20 percent of the space as the anchor tenant. Vornado lobbied hard for an exception to the proposed rezoning that would have forced it to reduce the height of the building. After protests and months of tough negotiations with the City Council, Vornado got its way.
Work on the tower was supposed to begin in April. In the meantime, the MLB Network leased the old MSNBC studios in Secaucus and began installing high-definition digital broadcasting equipment.
The city provided Vornado with up to $17 million in mortgage-recording and sales tax breaks for the Harlem project and an additional $5 million in sales tax breaks for the MLB Network. The Empowerment Zone agreed to give the developer a $25 million low-interest loan, tax-exempt financing, a property tax abatement and income tax credits from the state and federal governments. But Vornado, like many other developers in the current credit crisis, was unable to obtain financing, despite plans to invest $127.5 million, or 30 percent of the building’s cost.
To keep the project alive, Vornado offered to sell the land to the MLB Network at cost, or to build it a five-story building for its exclusive use. But it focused on a third option: slicing off about one-third of the building’s height, to cut the overall cost of the building by $100 million.
The developer also sought additional subsidies from the state as well as a higher rent, about $15 more per square foot, or $2 million a year. But that infuriated baseball officials, who thought that Vornado was changing the terms of their agreed-upon deal, according to three people who were involved in the discussions.
The MLB Network had also wanted to be in a marquee tower on 125th Street, not a generic office building.
MLB Network executives, who had expected to move to Harlem in the spring of 2010, now expect to remain in Secaucus, at least until the start of the baseball season in 2011. They are considering whether it makes sense to build expensive high-definition studios first in Secaucus and then in Harlem, real estate executives said.
The new Goldman Sachs building, under construction in Battery Park City in May.
With all the talk about what has not been built around ground zero, little attention is paid to what has: a 43-story investment bank headquarters where 11,000 people will be working next year.
That suits Goldman Sachs fine.
Famously averse to publicity, Goldman has said almost nothing about the $2.4 billion headquarters it is building in Battery Park City, cater-corner from the new 1 World Trade Center tower, since the project was announced three years ago. Though the firm will fill the tower from top to bottom, including six vast trading floors, its name will appear nowhere on the building, which will simply be called 200 West Street.
Only by accident has the building been in the news at all. In December, seven tons of metal studs fell as they were being hoisted by a crane. Robert Woo, an architect with Adamson Associates International, one of the firms involved with the project, was seriously injured. He remains paralyzed from the waist down. In May, a piece of steel fell 18 stories onto a nearby ball field. No one was hurt.
Now that the steel framework has reached its full 739-foot height and the building has become an undeniable presence on the Lower Manhattan skyline, Goldman has permitted a peek into the headquarters and how it was designed.
Leading the architectural team is Henry N. Cobb, 82, a founding partner of Pei Cobb Freed & Partners. After nearly 60 years living and working in New York, Mr. Cobb finally got to design his first Manhattan building. But you would not know it by looking at his firm’s Web site, where the Goldman Sachs headquarters — excuse us, 200 West Street — is not promoted on any list of projects. (Yes, Goldman insists on that level of discretion.)
The commission is unusually collaborative. Pei Cobb Freed and Adamson are working with Preston Scott Cohen, SHoP Architects, Ken Smith Landscape Architect, Piet Oudolf, Office dA, Architecture Research Office, Kuwabara Payne McKenna Blumberg Architects, Gensler, and Skidmore, Owings & Merrill, each of which has charge of some facet of the building.
“The premise is that each of these diverse talents will cause the other to do their best work,” said Timur Galen, the head of corporate services and real estate for Goldman Sachs, who is an architect himself. The group was selected to mix experienced firms with newly developing ones.
Mr. Cobb said he had never worked on a project with so many collaborators but believed it was a fruitful approach. “No matter how skillful,” he said in an interview last week, “it’s fundamentally wrong to put 11,000 people in a building that has been shaped by one sensibility.”
The 2.1 million-square-foot building was shaped not only by aesthetics, but by zoning and design controls. One key restriction, to preserve riverfront views from the World Financial Center, severely limited how far the tower could extend to the southwest. Rather than render this setback as an angular slice, Mr. Cobb turned it into a gentle curve — after convincing Goldman executives that work stations would fit more efficiently into a curved floor plan.
He also incorporated angular incisions in the building facade that follow the diverging angles of Vesey Street, which bounds the site on the south, and Murray Street, which bounds it on the north.
The cuts and the curve help keep the tower from looking like a cereal box, Mr. Cobb said, and give it a form “shaped entirely by its concern for the external context.”
Another important zoning restriction, limiting the southernmost end of the building to 140 feet in height, all but guaranteed that the elevator core would have to be on the north end.
That means the elevators are almost 400 feet from the main entrance, at Vesey and West Streets. “The problem was how to make this unavoidable walk interesting and eventful, and not seen as a nuisance,” Mr. Cobb said. The West Street passageway will have an 80-foot-long mural on one side and 20-foot-high windows on the other, meaning the artwork will be visible to the public.
The public will also be able to see the outside of the free-standing 350-seat oval auditorium on the ground floor, recalling somewhat a Richard Serra sculpture.
The heart of the building, however, will be what Mr. Cobb called a kind of living room for Goldman on the 10th through 12th floors, where exercise, dining and meeting areas will be linked by a sky lobby and a sweeping three-story stairway — well out of public view.
Maytal Wichman (r.) with daughter Maya, and Alex Drook protest a hotel/apartment building planned near Queens Blvd. in Kew Gardens.
A popular Kew Gardens eatery on Queens Blvd. is going upscale, literally, much to the anguish of its neighbors.
Owners of the Pasta Lovers Trattoria across from Borough Hall are planning to build a 21-story hotel and apartment tower on an adjacent parking lot.
Natalie Dauphin, who lives in an apartment building next to the lot, said a construction crew showed up at the lot June 30 and began excavating.
It was only then that many neighbors learned of a plan to build the "monstrosity," she said at a rally at the site last Thursday.
Dauphin and another neighbor, Malka Fraenkel, began organizing fellow co-op owners and tenants at Hampton House on 82nd Road.
They filed complaints with the city and the Buildings Department dispatched inspectors.
In mid-July, the agency issued a stop-work order, along with at least nine building code violations.
"The developers, we feel, have no interest in working with this community or even being a part of it and have no interest in assuring that Kew Gardens remains a great place to live," Dauphin told the protestors. "They only want a profit and to continue what has become the overdevelopment of Queens."
Crane accidents and concerns about damage by the construction to their 50-year-old structure is also on the minds of the residents of the 134-unit building, Fraenkel said.
"Our building is not necessarily in the best of shape and we are concerned because of this construction," she said.
The owners of the restaurant, who are the developers of the 21-story project, did not respond to requests for comment.
The planned tower is allowed under present zoning, but that doesn't mean it's appropriate, said City Councilman Tony Avella (D-Bayside).
"The zoning for this particular site is wrong. The zoning should be changed to better reflect the character of the neighborhood and the traffic patterns that are here," Avella said.
"This neighborhood cannot handle that much more congestion, traffic, pollution."
Kew Gardens was rezoned in 2005, but the area near Queens Blvd. was not changed, said Paul Graziano, urban planning consultant and president of the Historic Districts Council.
"The city has a strategic plan for large-scale development near wide roads. In theory, this makes sense," Graziano said.
"[But] because of other mitigating factors, it is going to have an enormous negative impact on this community," he added.