Howard Hughes Corp. Proposes $1.4 Billion Mixed-Use Project at South Street Seaport
Real Estate In-Depth | October 2020
NEW YORK—The Howard Hughes Corp. unveiled a comprehensive $1.4-billion proposal on Oct. 22 in the Lower Manhattan’s Seaport area, including the transformation of an underutilized full-block surface parking lot along the boundary of the South Street Seaport Historic District into a mixed-income development that would include some of the area’s first new affordable housing in decades.
The proposal also provides for the long-term financial stability of the South Street Seaport Museum, improvements to the museum’s historic buildings that will allow it to reopen, and a design for a new museum building on an adjacent vacant lot.
The plans were designed by world-renowned architecture and urban design firm Skidmore, Owings & Merrill (SOM). As the city focuses on economic recovery from the ongoing pandemic, the 250 Water St. development will help propel that recovery through more than $1.8 billion in economic impact for the city and state, creating nearly 2,500 permanent jobs and roughly 2,000 construction jobs, the development firm stated. HHC recently repaid the debt on its Seaport ground lease, has nearly $1 billion on its balance sheet, and is in a strong position to carry out the project.
“The Howard Hughes Corporation remains firmly committed to the Seaport and New York City for the long-term, with mixed-income housing and a plan to save the Seaport Museum at the heart of our commitment,” said Mary Ann Tighe, member of HHC’s Board of Directors, and Chief Executive Officer of the New York Tri-State Region for CBRE. “We believe visionary projects like this will help propel the city’s economic recovery.”
“As New York City works to recover from the devastating impacts of the pandemic, we are redoubling our commitment to the city and the Seaport. We aim to be part of the solution by investing in this unique, historic neighborhood and its economy, providing a crucial lifeline to the Seaport Museum, and building affordable housing in an area where housing prices are out of reach for most New Yorkers,” said Saul Scherl, president of the New York Tri-State Region, The Howard Hughes Corp. “Over the last five years, we’ve received input from a wide range of neighbors about the Seaport’s future that has helped shape our proposal, which honors the area’s history and culture. We’re eager to continue the constructive dialogue with the community and our local elected officials as we move toward public review.”
The centerpiece of the Dallas-based firm’s proposal is 250 Water St., which will include the first affordable housing built in Manhattan Community Board 1 through the city’s Mandatory Inclusionary Housing program. It will bring at least 100 permanently affordable apartments to a Community Board district where just 2.5% of all housing qualifies as affordable and the median household income is more than $150,000. The MIH rental apartments will be made available to families earning 40% of Area Median Income. Of the project’s roughly 360 overall units, approximately 25% will be affordable, along with approximately 260 condominium units.
The new affordable housing is particularly significant following the exit of nearby Southbridge Towers from the Mitchell-Lama housing program in 2015 with a co-op conversion that has resulted in more than 1,650 formerly income-restricted apartments being bought and sold at market prices well out of reach for working families.
The distinctive two-tower design of 250 Water St. includes a contextually scaled podium base designed to reference the heights, materials and massing of adjacent buildings and the vernacular of the Historic District. The base is articulated at key points to allow light down to surrounding streets and neighboring buildings and includes storefronts that are resonant and compatible with the historic storefronts found in the Historic District. The 250 Water proposal also includes enhancements to the Peck Slip Play Street used by the neighboring Peck Slip School and Seaport families, as well as community-oriented spaces and office space.
Over the past two decades the museum has survived significant setbacks, including a two-year closure after 9/11, the 2008 financial collapse, crippling flooding during Hurricane Sandy, and now an existential threat resulting from the pandemic, making the need to strengthen and secure its finances more vital than ever.
Through HHC’s proposal, $50 million will be available to the museum, providing it with a secure recurring revenue stream and allowing it to advance a first phase of restoration and rehabilitation that will enable the Museum to reopen.
Building on this solid financial base, the museum will plan for a new state-of-the-art building that will meet its programming needs. The future vision is for the museum to maintain and restore key current properties, which are crucial testaments to the history of how New York was built and grew, as well as construct a modern, properly climate-controlled, high-ceiling space suitable to display precious art and artifacts from its collection. HHC is funding significant design and planning costs to enable the museum’s future development, laying the groundwork for a larger fundraising campaign.
The project will also provide significant economic benefits for the area and city at a time when the need for private investment in its long-term future is urgent. The developer estimates the 250 Water St. project’s construction will generate more than $1.8 billion in economic output annually for both the city and the state, $640 million in new labor income, and roughly 2,000 construction jobs. Ultimately, the site is projected to create an estimated 2,475 new direct and indirect full and part-time permanent positions, and annually generate $645 million in economic output for New York City, along with $327 million in wages, salaries and benefits.
A number of government approvals are required for the project. The New York City Landmarks Preservation Commission (LPC) must approve the designs of the 250 Water St. Building and the new Museum Building as well as the improvements to the museum’s historic buildings. Additionally, in order to proceed with the overall project, a framework for transferring unused development rights from the HHC-leased Pier 17 and Tin Building sites to 250 Water St. must be approved. Transferring these development rights to the upland 250 Water St. site will help preserve the low-rise character of the waterfront and the existing built fabric. Through the development rights sale, upon which the 250 Water St. proposal is contingent and requires city review and consent, the $50 million will be made available to the museum. The proposed transfer builds upon the existing mechanism for transfer of development rights within the Seaport Subdistrict, which has been in existence since 1972.
HHC will undertake a comprehensive public review that will provides numerous opportunities for community engagement and public comment, including at LPC and under the city’s full public land use review process, known as the Uniform Land Use Review Procedure (ULURP). The proposal will be formally presented to the LPC in December, and the ULURP process is expected to begin in the spring of 2021. Under this timeline, if approved, construction, and the economic activity it will create, would begin in 2022, company officials stated.
The Howard Hughes Corp. owns, manages and develops commercial, residential and mixed-use real estate throughout the U.S. Its assets include a portfolio of master planned cities and communities, as well as operating properties and development opportunities including the Seaport District in New York; Columbia, Maryland; The Woodlands, The Woodlands Hills, and Bridgeland in the Greater Houston, Texas area; Summerlin, Las Vegas; and Ward Village in Honolulu, Hawaii.