New York City’s antiquated transit system and ailing infrastructure has been the subject of much hand-wringing. Add in the city’s vulnerability to climate change and a population projected to exceed 9 million by 2040, developers like Tishman Speyer and SL Green say they have no choice but to urgently find solutions.
“The real question for everybody is, ‘How do we build better transit in New York?’ Arguably it’s been a challenge since 1904 when the subway was first built,” Tishman Speyer Senior Director of Sustainability and Utilities Jonathan Flaherty said at Bisnow’s NYC 2030: The Future of Big Apple event Wednesday.
The next stage of the Second Avenue subway is pegged at a cost of $6B.
“If it’s going to be $5B every three stops, there will be no more subways in my life or anyone’s on this stage. It’s too much money, even for New York,” Flaherty said. “For New York to continue to build [projects like] Hudson Yards we need to build transit."
The panelists agreed decrepit infrastructure and transit must be fixed.
“Infrastructure is a pretty dry topic … [But] all of us in the room have been impacted by the problems in our infrastructure,” said RXR Realty Senior Vice President of Infrastructure Investment and Emerging Submarkets David Garten, who believes the public is now acutely aware of issues like the gateway project, crumbling subway and poorly maintained infrastructure.
One way to fix these sorts of problems is, in part, through public-private partnerships.
RXR’s involvement in New Rochelle is a prime example of how developers can join with government bodies to make a positive impact on the city, according to Garten. The firm has taken on the role as master developer for the city’s $4B downtown revitalization plan.
SL Green Managing Director of the Investment Group Robert Schiffer pointed to the firm’s 1.7M SF East Midtown development, One Vanderbilt, as a way a major developer can pull its weight.
One Vanderbilt is a public-private partnership between the city, SL Green and the MTA, he said. SL Green worked with Mayor Bill de Blasio and MTA on an agreement that required the developer to build certain transit improvements to allow the supertall building to achieve more density.
In total, SL Green is building $220M in infrastructure projects. Around $50M of the spending is going to on-site projects and $150M will be spent on improvements to the 4, 5 and 6 subway lines, which ultimately will lead to an extra train every hour, Schiffer said. SL Green contractors will carry out the work.
“The final part — which was a very difficult negotiation for us, ultimately we had to relent in order to get our project built — we cannot get a TCO [Temporary Certificate of Occupancy] for our space until all of those projects are complete,” he said.
Other panelists pointed to Delta Air Lines’ plan to run a $4B development at LaGuardia Airport, with a $600M contribution from the Port Authority of New York and New Jersey. They also noted the value capture that was used to fund the extension of the No. 7 line from Times Square to 34th Street and 10th Avenue.
“Very good developers know how to partner with the city and the state to leverage each other’s best attributes,” Amtrak Senior Director of Commercial Planning and Development Peter Waldt said.
In December, Amtrak selected a group of developers to redevelop Baltimore’s Penn Station and its surrounding properties.
“What we try to do is isolate their risk … [and] bring the market as vanilla a real estate deal as we can,” he said.
