Andrew Penson’s Argent Ventures, owner of Grand Central Terminal’s air rights, has “offered” to buy SL Green’s development site next door and build the proposed City Hall-backed One Vanderbilt office tower itself. But the pitch overlooked one crucial fact:
Namely, that Argent is not a developer at all. It’s apparently never built anything from the ground-up — much less a 65-story 1.6-million-square-foot office tower project that would include a myriad of transit and pedestrian amenities inside and nearby the congested terminal.
In fact, the “offer” looks like merely the latest front Penson has opened in its kitchen-sink campaign to force SL Green to buy air rights from him for many times more than Argent paid for them in 2006.
One Vanderbilt is an East Midtown game-changer that enjoys broad political support as well as the backing of the MTA and just about anyone fed up with the terminal’s dangerous crowding. It’s the centerpiece of the City Planning Department’s effort to rezone Vanderbilt Avenue to allow larger buildings than current zoning allows.
Like most of East Midtown, the avenue is hobbled by obsolete structures that average 70 years of age — a deterrent to large modern companies, which are increasingly choosing to set up new headquarters elsewhere in the city, and in some cases fleeing the area altogether.
The rezoning proposal must go through the city’s seven-month Uniform Land Use Review Procedure. Sources said the plan will be “certified” into the process within weeks.
The proposal would allow SL Green to build much larger than current rules allow without necessarily buying air rights.
Air rights transfers could still be used. But the proposal would also allow new projects more “dense” (i.e., bigger and taller) than are allowed under existing zoning, and even more dense — up to twice the size currently possible — in exchange for infrastructure upgrades to improve public circulation.
SL Green has pledged to pay for the $200 million-plus pedestrian/transit amenities package all by itself, including any overruns.
Argent claims the public deserves more, although without the deal, the city and the MTA have no money at all for the promised upgrades.
Some “community” gadflies also ridiculously claim the job would cost SL Green less than $200 million, even though the MTA has substantiated the budget — which is likely only to rise, not fall.
If the Vanderbilt plan is blessed by the City Council, it will then go to Mayor de Blasio for final approval.
But Penson and his partners bought the terminal’s 1.3 million square feet of air rights eight years ago for $61 per square foot. They want to sell the rights to SL Green for up to $400 per square foot as a condition of the project going forward.
He’s threatened the city with a $1 billion lawsuit against “unconstitutional taking of property.” It’s a brave approach given that the city may change zoning rules, and routinely does so, without respect to whether such changes will enrich any particular private-sector air-rights owner.
The New York Times recently characterized Argent as “David” in its struggle with “Goliath” SL Green, although this David boasts of $2.5 billion in assets on its Web site.
No rational real estate professional should fault Penson for tenaciously battling for his company’s interests, although detractors describe his style as more obstructionist than constructive — as in a failed attempt to block the public offering for the Empire State Building, where he was an investor.
But while Penson’s Grand Central air-rights purchase anticipated great profits down the line, anticipation is not a guarantee — or even a promise. The city clearly does not view its role as acting as Penson’s agent or broker to get him a better deal.
In any event, nothing in the proposal forbids SL Green from negotiating with Penson to buy air rights from Penson if it wants to. Nor does it prevent Argent from selling the terminal’s air rights to other “receiving sites.”
If One Vanderbilt stalls, the city will lose the chance to arrest decades of East Midtown stagnation.
The tower would rise on the block bounded by Madison and Vanderbilt avenues and 42nd and 43rd streets. It might serve as the new corporate home for New Jersey-based TD Bank, although no deal has been confirmed.
Public amenities include a glass-wrapped lobby, which would serve as a new waiting room for the terminal. Also a public plaza on Vanderbilt Avenue — as well as a slew of new corridors, stairway widenings, restoration of long-closed underground links between the terminal and nearby office buildings, and creation of new ones.
Tower tenants could not move in until all the promised amenities were completed.
The transit-package commitment has earned the good will, if not yet outright approval, of key players in the political process — including Council member Dan Garodnick, who scuttled former Mayor Bloomberg’s earlier, aborted rezoning scheme for all of East Midtown, from 40th to 57th streets.
The Vanderbilt rezoning would be a prelude to eventually reviving that proposal with greater regard for the public’s needs.
But it all depends on getting One Vanderbilt out of the ground first.