Real Estate Craziness: The 2 Broadway story

What a Mess, in what COULD be productive office space.
What a Mess, in what COULD be productive office space.

Back in 1995, in a real Horatio Alger, rags to riches tale, a Russian immigrant and former cab driver named Tamir Sapir acquired ownership of the 2 Broadway property for a mere $20 million dollars. Built in 1959, 2 Broadway is a 1.1 million square foot, 32-story, glass office tower at the tip of Manhattan. It has what can only be described as "million-dollar views" of New York Harbor. For whatever reason, the MTA decided that they had to have this building. The MTA made a sweetheart deal with Sapir, even going so far as to put him in charge of the entire restoration process. During this restoration there were many instances of corruption, cost over-runs, litigation, scandals and even mob infiltration.                                                                                                                                                                                            The MTA eventually ended up paying more than $845 million to renovate 2 Broadway and took out a 49 year lease at a cost of $63 million per year on the building. They paid almost a billion dollars to renovate a building they didn't even own?!? Where else but in the bizarre world of the MTA would this happen? This is even more shocking when you realize that, only a few years before, they had built a large office building, in downtown Brooklyn, that was supposed to meet all of their office space needs.This building, that is also leased from the city, is located at 130 Livingston Plaza. It was completely built at a cost of just about a third of what it cost to renovate 2 Broadway.                                                                                                

The move to 2 Broadway meant gorgeous corner offices for transit executives who used to be housed at 370 Jay Street and other places. Jay Street has nice enough views but, more importantly, it is right on top of a major subway hub with the A, C, N, R and F lines right downstairs, and just a couple of blocks from the 2, 3, 4 and 5 lines. You would think it would be the perfect site for transit operations. In fact, it was the perfect site for transit operations for more than 40 years! 370 Jay Street was originally built in 1950 as a state of the art modern building and transit hub for the New York City Board of Transportation. When the Transit Authority was formed in 1953, the city let them lease the building from the city for a dollar a year, for as long as they needed it. It remained the Transit Authority's main office building until the early 90's when, to relieve congestion, the MTA built 130 Livingston Plaza. At the time, we were told that these 2 buildings would more than meet the TA's office space needs. Yet somehow the MTA started to negotiate with Sapir to lease his building in the late 90's. Why? In addition to these 2 main buildings, the MTA also has untold amounts of unused space in subway mezzanines. In spite of all of this the MTA began a big push to clear out Jay Street and relocate to 2 Broadway. To fill 2 Broadway they eventually emptied 90% of 370 Jay street and 40-60% of 130 Livingston. Beginning in 2006, the final move out of 370 Jay to 2 Broadway began. Gleefully, the MTA Execs managing our public transit system packed up and moved out. As they did so they trashed 370 Jay street, shockingly allowing whole floors to become scenes of overturned desks, ripped carpeting, scattered files, and discarded and broken equipment. Hundreds of thousands of square feet were abandoned, wasted, not accounted for.                                                                                                                                                                                                                                                                                                                                  Another unseen victim of this mad dash to occupy 2 Broadway were the many underground offices that are located in subway mezzanines throughout the system. Because they are out of the public eye their abandonment went totally unobserved. Managers used to work in subway-mezzanine based offices, close to the transit workers they supervised and to the riding public. Makes sense, right? There are many mezzanine office spaces, now empty,  that have been built for transit workers over the years. Not to mention the underground police command precincts in the system, which are still occupied, look great and the NYPD is very pleased with. But apparently, it's better to move transit managers into a corporate office tower at an aggregate cost of some $4 billion, than to use spaces the MTA already owns, free and clear, which are actually close to the workforce and to the riding public. It seems they attempted to justify the colossal cash outlay for the new property by ordering everyone to move there. Call it "Occupy 2 Broadway."                                                                                                                                                                                                                                                                                                                          In 2009, when the "make every dollar count" man, Jay Walder, was installed as MTA Chairman, he made no move to rectify this appalling real-estate giveaway to Sapir. He did nothing to clean up 370 Jay Street and productively use the office space that was not being utilized. He participated in the misinformation campaign that 370 Jay was a "deteriorating" and "dilapidated" property. He set up the work being done now by Mayor Bloomberg, Marty Markowitz, and others to take this MTA property and give it away to NYU, a private, for profit University on the backs of transit riders -- an insult not only to the riding public because of the magnitude of the waste, but also an insult to CUNY students who do not see any such largesse and who face continually increasing tuition costs.

  Instead of justifying the move to 2 Broadway on the grounds that the MTA has already spent huge amounts of money, we say why throw good money after bad? Is this just a problem of large amounts of money that was thrown down the drain in the past? No, because the MTA continues to throw money away on 2 Broadway in the form of 35.1 million a year in lease costs and will continue to do so for the remaining 37 or so years left on the lease. There is also 25.3 million thrown away every year in the form of debt service and untold millions spent on parking, a private security force and the private staffers that are paid to maintain the building.                                                                                                                                                                                                                                                                  There are solutions to this 2 Broadway mess that the MTA has created. They must break the lease on 2 Broadway, or sublet it, immediately. There are enough instances of cost overruns and outright corruption to make this possible. They need to abandon 2 Broadway (1.1M Sq. Ft.) and move all of their executive offices back to 130 Livingston plaza (456K Sq. Ft.)  and 347 Madison Ave (277K Sq Ft.). They are properties that the MTA owns outright. Then, they need to develop the massive wholly-owned spaces in subway mezzanines which are obvious places to house field offices. Today there are dozens of un-used mezzanines on the IND line, each measuring in excess of 60,000 square feet, that could be used as MTA office space. These changes alone are enough to SAVE the cash strapped MTA more than $63 million dollars a year and more than $2.3 billion dollars over the remaining course of the 2 Broadway lease.                                                                                                                                     And if we don't act on this issue, who loses? Again, it is YOU, the taxpayer, the transit rider, who must now pay these yearly payments on 2 Broadway out of his or her own pocket, in the form of increased taxes, less service and fare increases.                                                                                                                                                                                                                                                                                                                                                                              The Issue of Real Estate is the first one of many that we will attempt to tackle in this website. Please read the other articles in the real estate series which will hopefully further explain some of the items mentioned in this article.                                                                                                                                                                                                                                                                                                                                                                                                                                       

Comments

Post new comment

CAPTCHA
Please type the letters and numbers you see below. It is not case sensitive.
Image CAPTCHA
Enter the characters shown in the image.