City Planning Looks to the Future with East Midtown Zoning Proposal

July 8, 2012

Last week, at a meeting of Community Board 5, City Planning finally released details of a much anticipated zoning proposal for East Midtown. The proposal, which could be the last major rezoning initiative of the Bloomberg administration, concentrates on the blocks around and north of Grand Central (the boundaries stretch roughly from Fifth Avenue to Second Avenue and from 39th to 57th Streets), which are already home to a number of high density office buildings.

The rezoning looks to incentivize property owners and developers to upgrade the area’s office building stock by permitting new development at a significantly higher density than is currently allowed. The new regulations may also incorporate a “district improvement fund” type program, similar to what already exists in Hudson Yards.  As part of this program, developers could contribute to a fund, intended to finance the construction of a pedestrian plaza on what is now Vanderbilt Avenue, in exchange for even more floor area.  Under today’s zoning, a limited number of property owners are permitted to purchase excess development rights from Grand Central, and that program might also be expanded under the new proposal.

As has been widely reported by various news sources and commented on in by our own Mitch Korbey, the new zoning regulations could permit the development of a tower taller than the Chrysler Building.  City Planning’s current thinking appears to be that the highest densities would primarily apply to very large sites, and not all new development would be as-of-right – the department is contemplating a new special permit (which would trigger a full ULURP process) that would be mandatory before the tallest buildings could move forward. However, it’s clear that the proposal is an upzoning and if realized, will significantly contribute to the density of East Midtown.

The City’s impetus for the proposal, as first discussed by Mayor Bloomberg in his State of the City address back in January, is that the office stock in this area of the Midtown has become outdated and no longer attractive to the most desirable tenants – and, as a result, NYC may lose its competitive edge in a global market that includes business centers like London, Paris, Singapore and Tokyo. Without an incentive to upgrade their buildings (more density), property owners will do nothing and the office buildings in east Midtown will continue to age and lose their appeal. Similar concerns were raised by the City when it rezoned Hudson Yards in 2005, putting into place regulations that were meant to transform far western Midtown from a dormant, former manufacturing area into an office and commercial hub. In its public statements on the East Midtown plan, City Planning has said that the East Midtown proposal will be timed to permit development in Hudson Yards to go forward first – they plan to include a provision in the new zoning text that prohibits any new development from taking advantage of the new regulations for a period of 5 years. This may be in response to early criticism of the proposal, which claims that it will create unnecessary competition for Hudson Yards.

Others have raised the fact that, so far, Hudson Yards has not exactly been developed as was originally planned, and ask how the City can ensure that the East Midtown proposal will result in new, state-of-the art office buildings.  The Hudson Yards district is unique in that in some areas, commercial development is actually mandated before residential development can take place. After a slow start where little new commercial development – or any development, for that matter – actually took place, Hudson Yards is finally experiencing a surge of new construction, although much of it is decidedly more mixed-use than was originally anticipated by the city. The lack of new commercial construction can be attributed to a number of factors, including a slow-down in the commercial office market, and the fact that the extension of the number 7 train, essential to provide transit to the future occupants of all those new buildings, has not yet been completed.

So why is another high-density, commercial upzoning needed in an area that is already home to one of the highest density business centers in the world (not to mention the city’s central business districts in Lower Manhattan, Long Island City, Flushing, Jamaica and Downtown Brooklyn)?  Because it is essential that City Planning continue to think towards the long term. Zoning cannot merely be reactionary, responding to a shortage of office space, following residential demand in former manufacturing zones, or putting height limits into place after an out of context tower has been built in a low-rise neighborhood. Zoning should anticipate the city’s impending needs and put into place a framework for future development. This can be a challenging mandate – zoning must walk a fine line between providing flexibility, so it doesn’t inhibit new development projects if the market changes, while at the same time incentivizing (or mandating) things that are needed, such as updated office buildings, ground floor retail in growing residential neighborhoods, and affordable housing.

In the case of Hudson Yards, not much time has actually passed between 2005 and today – it isn’t reasonable to expect that an entire neighborhood will become fully formed in the space of 7 years. The East Midtown proposal is still in the early stages – obviously, only time will tell the impact of these zoning proposals on New York’s economy and future place in the global market.  Nonetheless, it’s better to anticipate than to react.