The City Council’s Committee on Land Use is set to vote next week on the proposal to rezone 78 blocks in Midtown East, which is projected to create 6.5 million square feet of new office space over the next two decades.
Should the committee approve the plan and the full Council give the final thumbs up in August, however, only a small handful of the 16 sites the city’s identified for redevelopment could get started in the near term.
“Of those 16, many of them have multiple ownership, the single ownership properties have 20, 30 [or] 40 tenants in the building with various lease expirations so they’re not being vacated anytime soon,” Bob Knakal, chair of New York investment sales at Cushman & Wakefield, said at the brokerage’s midyear media breakfast Thursday.
Knakal said there are only three sites that are suitable for redevelopment in the next three to five years: the W hotel at 541 Lexington Avenue, Pfizer’s two properties at 218 and 235 East 42nd Street and the InterContinental Barclay Hotel at 11 East 48th Street, which just underwent a $180 million renovation.
“The fact is, if the Midtown rezoning passes next week, it will tangibly impact the market in 2027 to 2037,” he said.
But that might just be the right timing for a resurgence around Grand Central Terminal.
Cushman executive vice chair Dale Schlather said that 10 to 20 years is when millennials will be moving out of the city into the suburbs, which will once again drive demand for office space back into the Plaza District.