[NYguy]

Something else to keep an eye on, with the success of selling the development rights over the railyards, the MTA looks to profit from some of it's other properties, leading to more potential development sites. Ironically, the MTA once considered building it's own headquarters as part of the railyard development.



http://www.nytimes.com/2011/04/21/ny...dquarters.html

M.T.A. Is Planning to Sell Its Midtown Headquarters




By CHARLES V. BAGLI
April 20, 2011

The Metropolitan Transportation Authority, which has consolidated departments and reduced its payroll under severe financial pressure, now plans to sell its headquarters and two adjoining buildings on Madison Avenue in a deal that it says could reap more than $150 million.

Transportation officials are hoping that a developer will pay top dollar for the properties, three 20-story office buildings that form the eastern blockfront between 44th and 45th Streets. A buyer could demolish the structures and erect a modern skyscraper, and could also buy unused development rights over Grand Central Terminal and build an even taller tower than might otherwise be allowed.

“The point is, it’s a valuable asset,” said Jeffrey B. Rosen, the transportation authority’s director of real estate.

The decision comes as developers are beginning to shake off a three-year hibernation following the collapse of a speculative real estate boom in 2008. Investors are once again buying office buildings, while developers are looking to revive dormant projects or start new ones.

The three buildings might look bland and unappealing, but the allure is their location in a prime office district next to Grand Central, a workday entry point for executives coming from New York’s northern suburbs. The Yale Club is on the same square block.

While the buildings — 341, 345 and 347 Madison Avenue — may not be of architectural note, the authority’s headquarters and its hearing rooms have been the site of many a raucous demonstration, by employees, transit riders opposed to fare increases and cuts in service, or opponents of development on authority properties. It bought 347 Madison in 1979 for $11.9 million and 341 and 345 Madison in 1991 for $12.25 million and $23.75 million respectively.

The transportation authority considered selling the buildings before, in 1998 and in 2005, but decided against it each time. “I’d take a look,” the developer Douglas Durst said Tuesday, “for the third time.”

Mr. Rosen said a sale, or possibly a long-term lease, would happen this time. Jay H. Walder, the authority’s chairman, has streamlined departments, cutting 3,500 positions in the last year from its New York City Transit, Metro-North Railroad and Long Island Rail Road operations. The authority is also evaluating its space needs at 26 other buildings it owns or leases.

About 20 percent of the job cuts were at the authority’s headquarters. The plan is to move many of the remaining 873 employees at the buildings on Madison Avenue to 2 Broadway, a 30-story building between Beaver and Stone Streets in the financial district where the authority already has nearly 4,200 employees, including the New York City Transit administration.

The transportation authority said that a sale could generate “substantially” more than $150 million for the properties, an estimate that appraisers and real estate executives did not dispute.

Peter S. Kalikow, who was chairman of the authority from 2001 to 2007, said he had decided not to sell the buildings when he was in charge because they housed the Metro-North administration, which he believed should remain close to Grand Central. “Moving New York City Transit to 2 Broadway is best thing we ever did,” he said in an interview this week. “But there are no Metro-North trains down there.”

The authority, however, says that if it sold the headquarters buildings, it would find new space for Metro-North somewhere in the Midtown area. The Long Island Rail Road offices are at its hub in Jamaica, Queens.

In recent years, the authority agreed to sell the development rights over its West Side Yards for $1 billion to Related Companies and the rights over its Brooklyn property that forms part of the Atlantic Yards project for $100 million to Forest City Ratner. But the money has been slow to come because of the recession and a restructuring of the deals.

So far, the transportation authority has gotten $20 million from the Brooklyn sale and $20.9 million from Related, which has also put $32.6 million in escrow for the deal, with another $10.9 million due next month.

Still, the timing might be right for the authority. Dan Fasulo, director of research at Real Capital Analytics, said the real estate market was showing signs of life, with vacancy rates falling at prime office buildings in Manhattan and few large blocks of space available anymore. Rising rents are prompting some developers to build, rather than buy existing buildings, which might make the authority’s sites attractive.

“Tenants today are asking for all the bells and whistles in new buildings,” Mr. Fasulo said.