Cleaning the Grit Off Long Island City
Long Island City is about to get a face-lift. The city and federal governments plan to pour more than $75 million into sprucing up this section of Queens, which sits directly across the East River from Midtown Manhattan.
City Hall has been trying for years to transform the aging industrial district into a mixed-use community with office, residential and retail development.
The neighborhood is served by eight subway lines, which certainly makes it convenient. But the transportation infrastructure can also be overwhelming. Elevated subway tracks crisscross Long Island City, while Manhattan-bound traffic clogs the roadways that converge onto the Queensboro Bridge.
The mayor’s office and the New York City Economic Development Corporation say they have a plan to tame the snarling traffic and render the neighborhood more pedestrian-friendly.
“We’re going from gritty to green,” said Tracy Sayegh, an assistant vice president at the Economic Development Corporation, who is in charge of the streetscape project, which will break ground next month.
The improvements will include planting more than 500 trees and creating open space, constructing landscaped traffic medians, installing crosswalks at dangerous intersections, increasing street lighting and adding park benches. The city expects to complete this work in 2011, using a combination of $22.5 million in city funding and $56 million in federal funding, including a recent infusion of federal stimulus funds.
Developers have long dreamed of turning the core of Long Island City — where Jackson Avenue connects Court Square and Queens Plaza — into a modern business district. Citigroup constructed the first major office building there in the 1980s. For many years, this 48-story glass tower seemed marooned amid a sea of low-lying warehouses and auto repair shops. Then, the city rezoned the district in 2001 to encourage more development.
Two new office buildings have sprouted since then. Citigroup did a sale-leaseback deal for its original tower, which is now owned by SL Green, a real estate investment trust. But the bank opened a second building on a former parking lot opposite its original tower in 2007. Citi owns the new 15-story 526,000-square-foot building, called Two Court Square . The bank occupies the whole building except for the ground floor, which sits vacant now and is being marketed as retail space.
Also in 2007, the United Nations Federal Credit Union opened a 16-story, 275,000-square-foot building, called Court Square Place, across 44th Road from the new Citigroup building. The credit union has offices from the second to seventh floor, and conference rooms and other amenities on the top two floors. The United Nations has leased four floors in the building, while three other tenants have taken one floor each.
This is the first new multitenant Class A building,” said Greg Smith, a broker at JRT Realty, who is the leasing agent for the building.
Besides these new buildings, the Long Island City office market consists mainly of converted warehouses or factories. New leasing activity has been very slow since the recession began in December 2007. Only a handful of new office tenants that have signed leases here since the beginning of last year.
In the past, companies have been attracted to Long Island City because the rents are a fraction of Manhattan prices. But office space — especially sublet space — has been flooding the Midtown office market recently, causing rents there to fall. Brokers say that this is making Long Island City a tougher sell.
“We are an overflow community, and there’s not much overflow from Manhattan now,” said John Reinertsen, a senior vice president at CB Richard Ellis.
It has also been difficult to attract top executives to this neighborhood. The workers who have been relocated there tend to work in departments like accounting and information technology.
Earlier this decade, the Metropolitan Life Insurance Company tried a different tack. It moved into a 12-story, 700,000-square-foot renovated former airplane factory at 27-01 Queens Plaza North, right off the Queensboro Bridge. The management team — from the chief executive on down — commuted to Long Island City. MetLife reconsidered this decision, however, and moved many employees, including the chief executive, back into Manhattan in 2008.
The insurance company, which signed a 20-year lease for this entire building in 2001, still occupies about half of it. It has sublet 200,000 square feet to several companies, and is offering another 180,000 square feet for sublet on the entire sixth and seventh floors.
Despite the sparse leasing activity, the vacancy rate remains quite low. Of roughly seven million square feet, some 2.4 million is considered Class A space, or space in modern office buildings.
The Long Island City market as a whole has a 3.3 percent vacancy rate, although the Class A rate is only 1.3 percent, the according to Cushman & Wakefield. Annual asking rents for Class A space here are around $31 a square foot. But asking rents in Midtown Manhattan have fallen by more than 20 percent in the last year, to around $67 a square foot, down from $84 in the summer of 2008.
One new office building is under construction at Jackson Avenue and Queens Plaza Boulevard. Tishman Speyer Properties, a large New York developer, initially planned to build up to 3.5 million square feet of commercial space in a giant new development called Gotham Center. For the moment, though, it is building one 21-story, 660,000-square-foot building for the New York City Health Department.
Several other development projects that were planned during the economic boom appear to be on hold.
Rockrose Development, which has built residential buildings along the Long Island City waterfront, has assembled a parcel opposite the Citigroup buildings, where it could build up to 850,000 square feet of commercial space. But the developer has not said when it might begin construction. The three brothers who founded Rockrose are dividing up their company, which might further delay this project.
Silvercup Studios, a film and television production center in Long Island City, received approval in 2006 to build a large mixed-use project, with 650,000 square feet of commercial space, residences and sound stages. Three years later, the work has not yet begun. Alan Suna, Silvercup’s chief, said through a spokeswoman that he was committed to moving forward “in concert with the New York City marketplace.”
By J. ALEX TARQUINIO
New York Times