Putting a Price Tag on Privately Owned Public Spaces
The Occupy Wall Street battle for Zuccotti Park brought unprecedented attention to privately owned public spaces, property whose developers committed to making them open to the public, in exchange for a boost in the scale of the building they could construct. But it also overshadowed a basic question. Who is getting the better end of the deal for these spaces, property owners or the public?
We decided to find out. The New York World filed a freedom of information request with the Department of City Planning to obtain records detailing the public space promises made and extra square footage received by each property developer, compiled in 2000 by the urban planner Jerold Kayden in collaboration with the department and the Municipal Art Society. In total, says Kayden, now a professor at the Harvard Graduate School of Design, such spaces have enabled the development of 20 million square feet of New York City real estate that zoning would not have otherwise permitted.
Then we looked to put a price tag on the spaces. How much did the extra square footage add to the total value of each piece of real estate? That’s easier said than done. Office lease prices are a closely guarded secret, and since market conditions change, the price a building sold for five years ago doesn’t say much about its value now.
Click on the Images for Slideshow of 10 Public Spaces and Their Value
Public spaces: Arcade, Plaza, Underground Concourse. Value of bonus space: $353 million.
The privately owned public spaces at “Paramount Plaza” include a plaza, arcade and underground pedestrian walkway connecting Broadway with Eighth Avenue. The arcade includes a gym and a sports store. An elevator was broken during our February visit, leaving people with disabilities no way to move between upper and lower levels. (Calls and emails to Paramount Group, the building’s owner, were not returned.) The bright spot is an expansive plaza that offers a welcome escape from the crowds at Times Square, and the property also includes the Gershwin and Circle in the Square theaters. In 1971, the developers received an unusually generous 514,000 extra square feet in exchange for all the amenities. At last year’s sale price of $687 per square foot, the bonus space they used is worth more than $350 million today.
Photos: Maral Noshad Sharifi
Public spaces: Arcade, Plaza. Value of bonus space: $167.6 million.
This plaza and arcade are examples of the bare minimum required of privately owned public spaces. The only mandate is that these spaces remain accessible 24 hours a day. In total, some 20,000 square feet are open to the public. Property owners were able to build an additional 154,000 square feet of office space. Based on the $1,086-per-square-foot price at which an interest in the building sold last year, that space is now worth nearly $168 million.
Photos: Salim Essaid
Public space: Plaza.Value of bonus space: $162.6 million. Here you can find a 17,600-square-foot plaza open to the public 24 hours a day, complete with plants, a bicycle rack, and a towering art sculpture. The developers of were able to build 172,000 extra square feet in return (and could have built 4,000 more). The property sold last year at $941 a square foot – meaning that the extra space here is today worth $162.6 million. Photos: Salim Essaid
Public space: Arcade.Value of bonus space: $76.1 million.
The through-block arcade offers a plethora of amenities including lush plants, restrooms and a fountain. When we visited on a Thursday afternoon in February, a pianist was performing for a crowd under a skylight. This 13,000-square-foot Midtown East haven generated 78,000 additional square feet – equivalent to $76 million worth of space at last year’s sale price of $976 a square foot.
Photos: Salim Essaid
Public spaces: Preserved Courtyard.Value of bonus space: $56.3 million. The large courtyard in front of the New York Palace Hotel is accessible 24 hours, and a shortcut through the lobby to East 51 St. is open Monday through Friday, 7:30 a.m. to 9 p.m. The property took advantage of all the 111,000-plus square feet of bonus space allowed, adding $53 million worth of real estate based on the $482-per-square-foot sale price. Photos: Salim Essaid
Public spaces: Plaza.Value of bonus space:$24.2 million. The residential plaza at the Rivergate apartment high-rise includes amenities from bicycle parking to basketball courts, all easily accessible. Located at the base of a large tower, the space is dominated by bushes, trees and grass divided by swirling cement pathways. It includes multiple places for people to sit, a play structure for younger children, and clear signs indicating that the space is open to the public from 7 a.m. to 11 p.m. (But no longer an ice skating rink that opened along with the building in 1985: a decade later the City Planning Commission granted permission to remove it.) The developer elected to use about 41,000 square feet out of the 140,000 square feet it was entitled to – worth about $24 million to builder Zucker Organization in last year’s sale. Photos: Aidan Gardiner
Public spaces: Arcade, Plaza.Value of bonus space: $20.9 million. The plaza at the New York Helmsley Hotel is divided into two spaces. A spacious entryway is lined with four trees. A plaza tucked away at the back of the hotel features a steep staircase and curving wheelchair ramp lead to a small brick plateau surrounded by ivy and trees. Scaffolding blocks use of benches, but most of the area is accessible. A share in the property traded hands at $750 a square foot last year, making the hotel’s nearly 28,000 square feet of bonus space worth almost $21 million. Photos by Michael Keller (left) and by Aidan Gardiner (right)
Public spaces: Arcade, Plaza.Value of bonus space: $20.7 million. In 2008, this office tower was reincarnated as Dwell95, a high-end rental building designed by Philippe Starck. But its public space is nothing remarkable: an arcade and plaza between Wall and Water Streets that are really more of a covered sidewalk, accessible 24/7. At last year’s rich sales price of $806 a square foot, Dwell95’s 27,000 square feet in bonus space is worth about $20 million today. Photos: Maral Noshad Sharifi
Public spaces: Arcade, Plaza, Sidewalk Widening. Value of bonus space: $20.1 million. More than 6,000 square feet of public space is spread across a plaza, arcade and extra-wide sidewalk. These areas are open 24 hours, but the only seating is a brick structure surrounding a planter in the center of the plaza. Records indicate there should also be 3 movable chairs — seats that have ended up inside the building, removed from public use. The $630-per-square foot sales price last year was nearly 60 percent higher than in the 2008 deal in which developer Harry Macklowe sold the building to Boston Properties and Goldman Sachs, which can now thank the bonus space for $20 million of their $401 million deal. Photos: Aidan Gardiner
Public spaces: Through Block Connection. Value of bonus space: $0. The public passageway at the Bertelsmann Building is open business days between 8 a.m. and 7 p.m., offers pedestrians a less congested option than Broadway and is accessible to people with disabilities. The developers did not use any of the bonus space allowed — more than 846,000 square feet — so effectively they are providing this space to the public free of charge. At last year’s sales price, equivalent to $750 a square foot, this bonus space would have netted over $634 million. Photos: Maral Noshad Sharifi
So we turned to a list, compiled by Crain’s New York Business based on data from Real Capital Analytics, detailing New York City’s 25 biggest commercial real estate sales of 2011. Ten of those properties included privately owned public spaces. Based on the price per square foot of those deals and the amount of extra space generated through the public space bonus, we calculated that privately owned public spaces contributed anywhere between $19 million and $353 million to the value of each property.
Read the full post at The New York World.
