MTA Portfolio May Go on the Block

NEW YORK CITY-Even as the Metropolitan Transportation Authority moves ahead on large-scale capital projects including the Fulton Street Transit Center, a sale of its headquarters building at 347 Madison Ave. is one possible outcome of an RFP the transit agency has issued to real estate companies to find a broker/advisor on its office portfolio. An MTA spokesman tells GlobeSt.com that the RFP is an outgrowth of cost-cutting goals outlined in a recent report ordered by MTA chairman and CEO Jay Walder, who has said he hopes to avoid more service cuts or fare increases this year.

That report, issued in late January and titled “Making Every Dollar Count,” spells out some of the agency’s goals with regard to its real estate occupancy. “We will finally rationalize the MTA’s use of office space, currently scattered inefficiently across a series of headquarters facilities,” the report states. “We will maximize the benefit of the office space we need and sell off properties we don’t to support investment in our transit network. Overall, we will reduce the space we occupy by 15%.”

At present, the MTA occupies 2.6 million square feet of office space in 30 buildings across the five boroughs and in White Plains, NY, according to the RFP. It owns the fee on 561,000 square feet, including the 277,000-square-foot 347 Madison, and net leases another 1.48 million square feet on a long-term basis. The remainder is leased on a shorter-term basis. The agency has cut its administrative staff by 18% since 2009 as part of a round of internal cost-cutting measures, so a fair amount of its office space is unused.

There’s also the former MTA headquarters at 370 Jay St. in Brooklyn, which the nation’s largest transit agency leases from the city for $1 a year. It’s now vacant, and Brooklyn Borough President Marty Markowitz and others have repeatedly called for it to be sold to help close the MTA’s budget gap, which rose as high as $900 million in 2010 before a further round of belt-tightening.

“370 Jay St. and the Jay Street/Borough Hall station are, quite simply, a blight on the face of Downtown Brooklyn, the third largest commercial district in New York City, and don’t think for a minute that this would be tolerated in Downtown or Midtown Manhattan,” Markowitz said at a 2008 news conference. The Jay Street subway stop has since been renovated, and the future of the 400,000-square-foot 370 Jay will be decided as part of the MTA’s overall evaluation of its real estate strategy.

Five years ago, the MTA hired Massey Knakal Realty Services and CB Richard Ellis to help review its real estate portfolio. Among the results was the 2008 sale of the Mamaroneck, NY Metro-North train station to Verco Properties for $1.25 million.

Recommending or brokering outright sales of MTA-owned property wouldn’t be the only responsibility of the real estate firm or firms hired out of the current RFP, which was first reported by the Wall Street Journal on Wednesday. The broker or brokers would also be asked to help review lease terms, consult on capital improvements to properties and make recommendations on more efficient use of space.

These would include identifying desk-sharing arrangements and developing “a comprehensive administrative space needs program,” according to the RFP. The agency hopes to make a selection by late May, the MTA spokesman says.