NEW YORK CITY—For Marc Holliday, the CEO of SL Green Realty Corp., it's no coincidence that his company only does business within New York City. ”We have over $20 billion of assets within a mile radius where I sit at 420 Lexington. That's not by accident.”

Holliday believes in New York City.

There are 8.5 million people living in the city, with a yearly population increase of 50,000. Strong employment in the city helps SL Green, as the city's largest office landlord.

Over the past seven or eight years, there have been averaging about 20,000 to 30,000 jobs requiring office space. If you multiple that by approximately 250 rentable square feet per job that's what drives business for SL Green, he said.

Today, office tenants can rent in Midtown for $60 to $80 per square foot. “The average rent in our portfolio of 28 million square feet in Manhattan is probably around $70 per foot,” said Holliday. “That is still very affordable rent for corporations, which is why you see people staying in NY and not going somewhere else.”

Holliday described One Vanderbilt as a “once in a career assemblage that I was fortunate to be a part of and have the privilege to develop.”

As a private public partnership of SL Green, the city and MTA, the OK for One Vanderbilt, preceded the New York City Council's approval of the Midtown East rezoning. Yet, it now symbolically anchors the rezoning. In his 20 years at SL Green, the project is the first for the company in building at this scale.

Richard Anderson, the president of RTA Advisory Services, a private firm specializing in government relations and strategic industry planning, interviewed Holliday for the keynote discussion at Anchin's Construction & Development Forum on Thursday. The event was held at 7 World Trade Center.

Anderson noted that private development is outrunning public infrastructure.

Holliday agreed. However, in this project, SL Green is paying $220 million to build transit and pedestrian public improvements as part of the development. Grand Central Terminal will expand underground westward to One Vanderbilt. This will alleviate congestion from the subways and Metro North and also provide for the Long Island Rail Road, estimated to serve more than 100,000 new commuters. There will be newly constructed railroad platforms that connect to One Vanderbilt.

Commuters at Grand Central Terminal will benefit from SL Green's creating ingress and egress on the east side. Additional 4, 5, and 6 subway trains will be able to go through the station. SL Green will also create a pedestrian plaza between 42nd and 43rd streets at the foot of Grand Central.

Will cities require transportation or financial contributions for large scale developments? Anderson asked if the project at One Vanderbilt will set a precedent for the future.

“I hope it does. We'll see,” said Holliday. “It was, in my mind, partly a blueprint for how responsible development should take place in the city going forward.” He added the primary risks for any developments are scheduling and cost overruns. These risks were transferred from the city to SL Green, which has responsibility for the ultimate costs of the transportation improvements.

He says the $220 million cost was estimated several years back. SL Green has already awarded many of the contracts and it appears they are staying within that number.

There was a complication when the concrete subcontractor Navillus experienced union troubles and filed for bankruptcy. However, the job had been fully bonded by Liberty Mutual. The insurer made the decision for Navillus to complete the job with Tishman, the contractor.

SL Green is continuing to use 100% union workers for the project. The $3.1 billion, 1.7 million total square foot tower is still scheduled to open in 2020.

Last year, New York City experienced $50 billion in construction, according to Anderson. Twenty years ago it was $10 billion. Even with inflation, the five-fold increase is striking. Anderson wondered if the city was filling up with construction. If so, where would the next frontier be?

Given urbanization trends, Holliday responded that recent generations still want to move to the cities. “I don't think the frontier is out. I think the frontier is up,” said Holliday. He does not see the old version of sprawling frontiers of growth. “Everyone is attracted to Manhattan and the outer boroughs, and the frontiers are going to be vertical.”

Instant Insights /

SL Green Realty CEO Says NYC's Next Frontier Is Vertical

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