The Two Towers: Pier 40 plan would generate $115 million for Hudson River Park upfront, plus $10 million annually

VILLAGER EXCLUSIVE

BY LINCOLN ANDERSON   |  A top real estate advisory firm has crunched the numbers for local youth sports leagues’ plan to build a pair of 22-story residential towers next to Pier 40 in Hudson River Park, and found that it would generate an astronomical amount of money for the cash-strapped park.

The study of the Pier 40 Champions plan — along with a study of a rival plan by developer Douglas Durst — was presented to members of the Hudson River Park Task Force last Friday. While the reports have not been made public, The Villager has obtained copies of both documents.

The analysis of the Pier 40 Champions proposal was done by Newmark Grubb Knight and Frank, and is basically a projected “financial model” for the plan. Newmark found that the two new towers would yield a combined initial $115 million ground-rent payment for the park. That figure is around what the Hudson River Park Trust says is needed to repair the aging, 15-acre West Houston St. pier, many of whose thousands of steel support piles are corroded, and whose concrete roof has eroded in the elements.

In addition, under the youth leagues’ plan, the two new high-rises would provide an annual income of $8.9 million. Plus, parking at Pier 40 would net another $4.7 million a year, while a mix of retail, indoor recreation, office space and a marina would pull in an additional $3.5 million a year.

All told, after the initial massive ground-rent payment for the towers, the combination of the high-rises and other commercial uses at Pier 40 would produce $17 million per year in operating income — with $10 million of that going to the Trust as a rent payment, according to Newmark.

Under the Champions plan, the two towers would be located just east of Pier 40, in the parking turnaround area between the former Holland-America shipping pier and the Hudson River Park bike path.

Newmark recommended that the best scenario would be a 280-unit residential condo building paired with a 326-unit “80/20” rental building, with 80 percent market-rate units and 20 percent affordable units; the developer would get a property-tax break for creating the affordable units. The condo building would be 270,000 square feet and the 80/20 rental 315,000 square feet.

In Newmark’s analysis, rents for the market-rate units would range from $3,580 for studios, to $4,500 for one-bedrooms, $6,500 for two-bedrooms, and $8,645 for three-bedrooms. Meanwhile, the affordable studios would rent for $647 per month, one-bedrooms $812, two-bedrooms $1,175, and three-bedrooms $1,560.

Newmark determined the total cost of building the twin towers — not including the hefty ground-lease payment — at about $280 million.

The Pier 40 Champions coalition includes the likes of Greenwich Village Little League, Downtown United Soccer Club (DUSC) and P3 (Pier Park & Playground Association), organizations that all make heavy use of the huge, artificial-turf playing field in Pier 40’s courtyard. The youth leagues’ chief concern is preserving the field. Several years ago, they mobilized to oppose a plan by The Related Companies to turn the pier into a “Vegas on the Hudson” entertainment complex, which the leagues feared would threaten the field and the pier’s family-centric, youth sports culture.

So, the leagues, last year, working with WXY Architects created their own concept plan, and more recently tweaked it a bit, to provide even more field space on the pier. The Champions plan is a creative spin on an earlier idea by outside consultants that the leagues commissioned last year to try to solve the Pier 40 puzzle.

That study found that retail use on the pier would provide the highest revenue for the park combined with the least impact, when compared with other possible uses, like destination retail or entertainment. But the idea of housing on the pier generated intense opposition from some stakeholders, notably Assemblymember Deborah Glick, who called it foolhardy in an era of rapid climate change.

More to the point, residential use is prohibited under the 1998 Hudson River Park Act that created the park, so a legislative change in Albany would be required. Glick has said she would oppose such a modification, while state Senators Brad Hoylman and Daniel Squadron both recently publicly said they have serious reservations about the idea of housing in Hudson River Park.

The Champions hit on the idea of putting the towers on the upland part of the park instead of on the pier, saying this would actually make them cheaper to build.

After the latest revisions, the towers’ height has grown from 15 stories to 22 stories — since the plan apparently “works better” this way. The 15-story height was used initially since it’s equal to that of the nearby residential complex Morton Square.

Driving the search for development schemes for Pier 40 is the fact that Hudson River Park is supposed to be financially self-sustaining, with Pier 40 designated as a key commercial, revenue-generating “node.” Funding from the state and city has dried up and the park is now operating at a deficit, making Pier 40’s cash potential even more critical.

Meanwhile, there is another competing concept plan for Pier 40, this one by developer Douglas Durst. A few months ago, Durst resigned from his position as  chairperson of the Friends of Hudson River Park, citing differences with the Trust and its president, Madelyn Wils, about the direction of the park and, most significantly, the idea of residential use on — or, for that matter, next to — Pier 40.

Durst, who has teamed up on the plan with Ben Korman, who used to run the parking at Pier 40, is proposing an adaptive reuse of the existing pier-shed structure. Among the uses he envisions are high-tech offices, retail, paid recreation and a continuation of the pier’s parking — but operated more efficiently and compactly by means of parking stackers.

According to Wils, though, Durst did not provide enough information for Newmark to perform a proper analysis. But Jordan Barowitz, a Durst spokesperson, said they did give the necessary financials.

At any rate, the financial model Newmark outlined for the Durst concept is much sketchier than that for the Champions.

As for the rent that office tenants would be expected to pay, Newmark found Durst’s recommended figures high, about $10 to $20 per square foot above the going rate.

The firm’s report also cautioned, in the wake of Hurricane Sandy, “Flood risk may be deterrent to corporate real estate offices, particularly for tech companies.”

Regarding retail, Newmark said Durst will need an anchor tenant, along the lines of a Fairway, Whole Foods or Trader Joe’s supermarket or maybe a Brooklyn Bowl. But the real estate firm questioned whether such tenants would be willing to pay Durst’s anticipated base rent of $120 per square foot, which is at least double current market rents.

Newmark also said Durst’s projected fees for paid active recreation on the pier are far too optimistic, as is Durst’s projected revenue from this use, $4.5 million. Whereas Durst is saying that a recreation facility could command $25 per square foot rent on Pier 40, Newmark noted that Basketball City at Pier 36 on the East River pays only $3 per square foot.

Durst has said he would not personally develop his concept plan, but is “just putting it out there” to try to help save Pier 40 and finance its repairs, as well as help finance the 5-mile-long park, in general. Similarly, the Champions’ soccer moms and dads would not construct the high-rises.

Meanwhile, Durst spokesperson Barowitz dismissed the real estate firm’s study as biased.

“The Newmark report was commissioned to refute our proposal, so it’s not surprising they question our numbers,” he stated. “With nearly 100 years in New York City real estate, we stand by our assumptions. What should be questioned is the math in the housing proposal, which is overly optimistic; the Champions assume an extraordinary high rate of return and efficiency factor.”

Asked for comment by The Villager on the leaked Newmark reports, and on Barowitz’s calling the study slanted, Wils maintained that the Trust isn’t favoring any proposal, and defended the real estate firm.

“The Trust is facing serious problems on Pier 40, and does not have the luxury of favoring one idea over another if we are to save the pier — both the income stream it generates for the park and the public space it provides,” she said. “Therefore, rather than trying to preclude options, the Trust is working to make a case for having all options on the table.

“Newmark, one of the top brokerage firms in New York, was retained specifically to employ its independent expertise in Manhattan real estate and help us explore both ideas,” Wils said. “However, as we have repeatedly stated, we will not be in a position to judge the viability of any concepts until we have formal responses to a future request for proposals [R.F.P.] in hand.”

Wils has repeatedly said that to do the R.F.P. right — so that it attracts a wide array of potentially feasible ideas for the pier — the park act must be opened up and modified to allow more uses, including but not limited to housing.

Durst actually likes housing in parks

Adding yet another twist, Durst is now saying that he is, in fact, a big supporter of housing in parks. Commenting on The Villager’s article two weeks ago, “Two plans, many questions; Pier 40 forum coming up,” Durst said, again, his preference is to reuse the pier’s existing structure, which is structurally sound, and thus less wasteful than either partially or totally tearing it down.

However, he then added, “Once the decision is made to build housing in the park, and I am very much in favor of building housing in parks, there is no reason to only look at the park in front of Pier 40. There may be better locations, and if so, the parking area in front Pier 40 could be park instead of high-rise housing.”

Asked for clarification of Durst’s position, Barowitz said, “He thinks putting housing on Pier 40 or putting it next to Pier 40 and knocking down a portion of the pier is not a good idea. Housing in parks, as a concept, is something he is fine with, i.e. Battery Park City and Brooklyn Bridge Park.

“Douglas has always said that he does not have an ideological problem with housing in the park,” he added. “His issue is with the efficacy of this plan [by the Champions].”

Asked if Durst would support housing in Hudson River Park, Barowitz said, “This is a discussion about Pier 40. Douglas doesn’t have a proposal to build housing in another location in the park.”

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10 Responses to The Two Towers: Pier 40 plan would generate $115 million for Hudson River Park upfront, plus $10 million annually

  1. Is this park in some kind of alternate universe??? In other flood prone areas like this one the govt is buying up the land to stop housing from being built on it, because it will only flood out when the next weather event happens. And if anyone thinks there will not be another bad weather event sooner rather than later, they are in denial of reality. Spending millions and millions of dollars on land that will get washed away again and again is beyond pound foolish. I can't believe that these so-called learders can only come up with 2 options in The Village that earned it's fame for its creativity, imagination and innovation. There must be a better and cheaper option than wasting millions of dollars, and then what, begging for a bail-out after the next storm when we already know better? That's sad. Build less, save millions, and this park will sustain itself longer than ruining it with residential density. There is no rule that everything has to be world class and state of the art. This neighborhood used to believe in the beauty of simplicity, but now its all about money and greed. Wow, what an ugly change to this formerly bohemian paradise.

    • Patrick Shields

      Another guest below asks why there are not other plans than these two, but I've been pitching the third option for years to deaf ears. A modest sized pro soccer commercial partner would be appropriate, and consistent with current uses, as well as economically viable and growing. If pushed by the community, there's a possibility of it being declared acceptable to the elected officials in advance of an RFP, so there is not another failure — both sports and park are achieved. Let's adaptively re-use PART of the shed AND create a PRO/PUBLIC arena to maximize park financial security, with public shareholders if there must be revenue producing commercial activity according to the Act. Bring the two factions together, add sports revenue, and get this done already.

      Hoylman was the most right on guy at the meeting when he said he found it an alternate universe that two Village groups were competing against each other for the right to develop on public land. Since the Pier 40 Champions keep unbelievably championing what Glick, Hoylman and Stringer say will not happen, why not WE, THE COMMUNITY, develop a COMBINATION of small arena and Durst's adaptive re-use for office space, so we can save the sports group from themselves.

      To do this I propose the following:
      – The shed remains on the northern side of the pier footprint — both the north half of the west side, and the north half of the east side. Office and parking are left below, with enough shed as necessary to accommodate the size of the pro field and the stands. — The arena's north, west and east stands are sloped down using the existing structure, further utilizing Durst's adaptive re-use idea, and adding economic value for the park, as well as a field usable by the community for the vast percentage of the year, 250-300 days.
      – The southern half of the shed is removed, providing more of what Tobi wants: ground-level green space and park, and waterfront access and green space, that are built up for storm surge.
      – A lower, more modest south stand is constructed in the middle of the existing footprint. Cafes line the southern exterior of the south stand to provide for the field users.
      – The upland space is used for the small court stuff, cafes and more green-space.
      – A footbridge is constructed across the West Side highway to Clarkson St., a great Durst idea that solves the issues of pedestrian and car traffic, since the commercial portion would remain truly to the north but that would be especially crucial on game days.
      Obviously arena roof area is designed to catch solar, and spaced apart wind turbines cut into the uppermost portion of the remaining north and west shed upper walls. Storage of power is necessary and possible and could benefit the entire park cost-wise and facilities can be built in the uppermost reaches of the remaining shed, as that would likely become awkward space. Creation of the publicly owned soccer team(s) (men's and women's), pays for the up-front piling repairs, tear down, and arena building, through fundraising and loge pre-sale, as I have long argued would be successful. Durst (or whomever) shares piling repair and construction cost of adaptive re-use commercial spaces and parking, and operates them with rental payment to the Park. Arena is publicly owned by shareholders (beginning with availability to community members, then outward) Green Bay Packers like, public ownership, professionally operated, and is 100% profit to the Park after expenses and operation.
      In short, WE are team owners who have built and endowed our own park, and actually own the primary commercial entity, rather than waiting to bequeath in entirely to some developer. A compromise must be made, and one way or another, it must include a sports and recreation partner, a natural fit for the pier. Time for Tobi and Durst to bury the hatchet and come together around this. We have one shot at doing it ourselves, and this is it. Community development around sports and recreation, community jobs created by community members. I've asked the editors to add a crude sketch I've drawn.
      Patrick Shields Greenwich Village http://www.nycmls.com

      • Patrick Shields

        To clarify, I mean keeping the entire northern 40% of the shed: 1.) the north side entirely, 2.) the north 40% of the west end, and 3.) the north 40% of the east end. Possibly even less % on the northeast and northwest ends if the pro / public field can be fit into the smallest possible footprint while still maximizing seat and box revenue. The field, which would be used by the public the vast majority of the year, makes up for the lost shed revenue, while CEMENTING the other 60% as PURE PUBLIC. And if you understand where soccer is going, and the parents group SHOULD, I argue that it will do that and then some. I'm willing that argue that it would be successful enough financially for a pure park experience on Pier 76, with both parks having an equal public only total square footage. We're talking about TV revenue, licensing, vending. All from a venue the public uses more than the pro organization. This is possible. For the pro entity, it is location location location. Nothing has more impact than housing. This is a good compromise. http://www.nycmls.com

      • And a reminder that the focus for this idea is no longer for Major League Soccer but rather for either North American Soccer League or pro soccer generally. Better to see the latest post here:
        http://nycmls.com/posts/
        rather than the home page.

  2. This is clearly a joke. Madeline Wils wasting money.

  3. Lost in most of Mr. Anderson's parroting of the Trust's talking points er I mean his "reporting" is that not only is residential on parkland being pushed on Pier 40 it is also in Mr. Gottfried's plan for Pier 75 AND the plan that Barry Diller and Ms. Wils are discussing plans for a residential tower on Pier 54 as well.
    I say if we are going to get an "an astronomical amount of money for the cash-strapped park." then let's cash in our chips, and spread the booty throughout the park and lets just redesign it all with all the added cash.
    Cause if Ms. Wils wants to open up the Hudson River Park Act she needs to be more transparent in what she is promising people like Barry Diller who's committing upwards of 40 million dollars for his pier.
    Lets just put our "trust" in someone like Ms. Wils who continues to dissemble day to day with her facts.
    So lets build these TWO 22 Story towers and more please.
    Ms. Wils spearheaded the alienation of parkland throughout her tenure at the EDC and is still working for her boss Mike Bloomberg and his girlfriend at the Trust.

  4. Cliams of future floods making residential construction unacceptable is a red herring thrown by the desperate.

    If developers with more knowledge, experience and resources than the pundits here think it's a good idea, and they put their money where their mouth is, then any fear-mongering arguments against residential should be ignored.

    (Also, recall Sandy devastated because high tide coincided with a full month – an occurrence rare indeed.
    Ignore the Chicken Littles.)

    • "If developers with more knowledge, experience and resources than the pundits here think it's a good idea…"

      And yet no developer HAS stepped forward pitching residential…and under what conditions/tax breaks/concessions they need to put up two 22 story towers in parkland. This "plan" of Tobi Bergman and Madelyn Wils is just a fantasy league they are pitching to entice the lemmings to allow them to make changes the the Hudson River Act.
      And even Mr. Lincoln Anderson has no idea what that legislation entails-though he has claimed it is the same as last years–IT's NOT-or that the details were discussed in The Villager…again so easy to search Archives…and it's not there either.
      But as I've stated before, Mr. Anderson has a lot of hats to wear here so sometimes things slip by.
      Oh and one of the big lies Ms. Wils, the Trust, and this paper, have been spreading to us
      "Chicken Littles" is that Pier 40 is in imminent risk of falling into the Hudson River and that it will take 130 million dollars to repair for use.

  5. Not sure why this article is so pointed at one guy, Durst. Who cares about him? This is about the Gated Community we're building along the western shore of Manhattan; not with fences, but with more costly amenities that increase property values, rents, and taxes (NID) that force out the middle class.

    Despite the technical glitches and poor presentation of the Champions' proposal at the Pier 40 Forum, they have a great pier plan. Unfortunately, it is at the expense of other park users. The residential plan is a terrible precedent for parks and a very bad reason for changing the HRP Act. Turning part of our park over to wealthy residents is antithetical of everything The Village once stood for and should be a non-starter.

    And if, as stated, the residential towers can't be built until the City govt decides how to prevent the next storm from washing it all away, then it'll never happen in our lifetime, and no one will be happy.

    I can't believe there's not a 3rd or a dozen better options.

    • 54 - 40 or fight

      Pier 54 and Pier.40 or fight….for residential towers / sport fields / parking… dont forget ?Gansevort penninsula

      This dispute/forum is starting to remind me of the Oregon boundary dispute.. known as " 54 / 40 or fight"
      I attended the community board meeting in the fall (November-2012 ) shortly after "Sandy " flooded many expensive residential town houses and buildings in the west Village Waterfront ..(including 1 building that was "flooded" and compromised from Sandy. this West side Highway property is is now being demolished by NyC HPD / D.O.B . The owner will have a demolition bill of 250.00 (emergency demo interest @ 9 % ..

      In that meting the spokeswomen and male staff of Hudson river trust were bringing up solution to the large debt need ing to be met in 2 years….so the Hudson River representatives said one of the alternative the were on the drawing board was to create a surcharge tax of 15 % for those who resided on the west side highway to a boundary of two block east inland…
      The Hudson reps said : the are the residence who enjoy the benefits of the Waterfront Park on a daily basis..
      I well spoken lady raised her hand and said quote: my basement was flooded from "sandy " the 100 hundred year storm..Fema said it will be year before I see a penny ..I have law suit from my tenants…and have to make emergency repairs or the dept of buildings will hire an emergency crew and take over the job and charge me 9 % interest..i will have to relocate my tenants at my cost..Over and above that cost Hudson River Trust wants to add a 15 % surcharge based on the upset value of my property…,,,The had tears in her eyes and walked out
      in disgust…
      I waved my hand …got called to speak ..I stood up and said why dont Hudson river Park Trust rezone the neglect Pier 54 and Pier 40 via "UURLP" Have the well respected developers bid to build 80/20 residences….. build enough floors space /elevations creating enough rent revenue to subsidize the cost of the entire Hudson River span..
      Then take Gansevort Penninsula and make that a "sandy beach" and"sport field " and have a Park Recreational Center at gansevort Penninsula..(that would br a win win situation)
      Is any from Hudson Trust Listening ?

      I hope so cause the parent of the little league base ball ,socker ,football teams will be paying several thousand dollars more a year in surcharge land use taxes just to have their child play sports… if residential towers are not built to subsidize the large debt..40 foot towers would be the saving grace and a win win situation for all, including me.

      Sooooo..spread the word West Villgers… save your self from Hudson River Trust's plan to surcharge /tax levy on your West Village property….oh I alomost forgot ..commercial property will be surcharged at 30 %….of upset value

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