The strip of pavement outside 180 Water Street, home to the New York City Human Resources Administration (HRA), may not look like much, but it’s for sale. The building’s owner, Melohn Properties, recently put the tower on the market for $180 million. If the owners get their asking price, this drab stretch of concrete, plus a loading area on the side of the building, will be worth nearly $21 million to them. That’s because the sidewalk is a privately owned public space, like hundreds of others around Manhattan — including Zuccotti Park, home base of Occupy Wall Street.
In exchange for this sliver of sidewalk, public records show, the developers of 180 Water Street received permission to build nearly 47,000 square feet of office space that would not have otherwise been permitted by zoning. Multiply each of those square feet by the current asking price — which we calculate at about $455 per square foot — and the value of privately owned public spaces to property owners comes into sharp focus.
The sidewalk outside 180 Water Street has special significance because it’s the site to which advocates for the poor and people with AIDS flock to protest program cuts and other actions taken by HRA. While some demonstrators report requests from police and building security to refrain from blocking or distributing flyers at the building entrance — part of the required 2,400 publicly accessible space under an overhang — they and other members of the public generally have free access.
“If anyone’s parking there, we don’t control that,” said Barry Goldberg, general counsel for Melohn Properties.
Goldberg was the owner’s attorney on the company’s purchase of 180 Water Street in the 1990s and is now handling its sale. He says the call from The New York World was the first he had heard of the property having obligations to open the sidewalk to the public. “I’m not aware of it at all,” he said, noting that no documentation came up in the title search or other documents in the transactions. “We comply with the law as required.”
Like many privately owned public spaces, 180 Water Street picked up the extra square footage “as of right,” because its developer met the standards set by the City Planning Commission.
The battle for Zuccotti Park brought unprecedented attention to privately owned public spaces, property whose developers committed to making them open to the public, in exchange for a boost in the scale of the building they could construct. But it also overshadowed a basic question. Who is getting the better end of the deal for these spaces, property owners or the public?
We decided to find out. The New York World filed a freedom of information request with the Department of City Planning to obtain records detailing the public space promises made and extra square footage received by each property developer, compiled in 2000 by the urban planner Jerold Kayden in collaboration with the department and the Municipal Art Society. In total, says Kayden, now a professor at the Harvard Graduate School of Design, such spaces have enabled the development of 20 million square feet of New York City real estate that zoning would not have otherwise permitted.
Then we looked to put a price tag on the spaces. How much did the extra square footage add to the total value of each piece of real estate? That’s easier said than done. Office lease prices are a closely guarded secret, and since market conditions change, the price a building sold for five years ago doesn’t say much about its value now.
So we turned to a list, compiled by Crain’s New York Business based on data from Real Capital Analytics, detailing New York City’s 25 biggest commercial real estate sales of 2011. Ten of those properties included privately owned public spaces. Based on the price per square foot of those deals and the amount of extra space generated through the public space bonus, we calculated that privately owned public spaces contributed anywhere between $19 million and $353 million to the value of each property.
The privately owned public spaces at “Paramount Plaza” include a plaza, arcade and underground pedestrian walkway connecting Broadway with 8th Avenue. The arcade includes a gym and a sports store. An elevator was broken during our February visit, leaving people with disabilities no way to move between upper and lower levels. (Calls and emails to Paramount Group, the building’s owner, were not returned.) The bright spot is an expansive plaza that offers a welcome escape from the crowds at Times Square, and the property also includes the Gershwin and Circle in the Square theaters. In 1971, the developers received an unusually generous 514,000 extra square feet in exchange for all the amenities. At last year’s sale price of $687 per square foot, the bonus space they used is worth more than $350 million today.