Alexandria Real Estate Equities has had enough with the city.
The firm alleged in a federal lawsuit this week that the city has prevented it from building the third tower at its East Side life sciences campus, the New York Post reported.
Alexandria signed a lease with New York City Health + Hospitals Corporation in 2006 to develop the Alexandria Center for Life Science, comprising two buildings, the East and West Towers, with an option for a third, the North Tower. The campus is on city land east of First Avenue between East 28th and East 30th streets, across from Bellevue Hospital.
The dispute stems from Superstorm Sandy in 2012 and a sea wall project on a stretch of East River waterfront.
By then, Alexandria had already constructed the first two towers. Its suit claims the city assured that FEMA would pay for the wall and that it would not affect Alexandria’s construction and operation.
But Alexandria’s founder and executive chairman, Joel Marcus, said in a statement that the two agencies “fraudulently strung us along for years with false assurances and concealed essential facts as part of an insidious scheme” to make the developer pay some of the sea wall’s costs.
The firm claims the city “intentionally blocked us from timely developing our third tower.” It is a surprising accusation, given that the city gave Alexandria a deadline to finish the project and that the past few mayoral administrations have made life sciences development a priority.
The city’s Law Department said it had not been served with the complaint and therefore would not comment. EDC declined to comment.
Alexandria and the city agreed in 2018 to amend its long-term lease to allow for the third tower at 430 East 29th Street spanning 550,000 square feet, larger than originally planned. The Pasadena-based real estate investment trust filed permits for the project in January 2020.
The pandemic hit a month later, delaying the project. Alexandria also has yet to land an anchor tenant. Still, The Real Deal reported last year that the city expected financing for the project to close in late 2024 or early 2025, and for construction to begin shortly thereafter.
Design changes account for a large part of the delay. In 2019, EDC and H+H reportedly told Alexandria they wanted a portion of the sea wall integrated with the foundation of the tower, even though that was not required.
Alexandria claims the city has known since 2020 that the plans were in flux and that FEMA approval might take years.
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A spokesperson for the developer said it has “sustained tens of millions of dollars in damages, including costs associated with the design of the floodwall and North Tower, and millions of dollars in lost profits” because it could not finish and sublease the tower.
The firm claims it missed out on a life sciences bull market as a result.
The life sciences industry has long been touted as a potential gold mine for the city, but one that needs taxpayers’ help to reach a critical mass. The EDC’s mission is to facilitate projects that align with city goals and wouldn’t happen without help from the public sector.
— Christina Previte