Viacom Eyes Long Island City For Its Studios and Offices
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Hollywood, it seems, may soon make greater inroads into Long Island City.
Viacom’s Sumner Redstone in the near future could announce that he is relocating a major portion of his company’s Manhattan offices, studios, and support staff to Long Island City, where Silvercup Studios and Kaufman Astoria Studios are based. The global entertainment company has been evaluating relocation options, among them Long Island City, for its prominent television and motion picture brands, including MTV Networks, Comedy Central, BET Network, Paramount Pictures, DreamWorks, and Famous Music.
Long Island City also may soon be known as Wall Street East. One of the best-represented banks in the city, HSBC, has been in discussions to relocate its trading and support staff to Long Island City, according to sales and trading insiders.
Viacom’s board of directors announced Monday that it had entered into a revised employment agreement with Mr. Redstone that links the majority of his compensation to superior shareholder returns. One way to increase returns would be to reduce its occupancy costs.
The company currently leases 1.4 million square feet (or 78%) of the space in the building run by S.L. Green (which, incidentally, is also bullish on Long Island City) at 1515 Broadway, the former headquarters of W.T. Grant. Insiders say they believe the executive and corporate offices would remain in Manhattan, at rents of about $80 a square foot when its lease is renewed in 2008.
In Long Island City, Viacom could rent brand new, class A office space for a cost of about $45 a square foot. Offices that move to Long Island City from Manhattan and other areas receive benefits in excess of $16 a square foot in rent reductions as a result of various incentive packages, including relocation incentives. In Viacom’s case, that would bring the occupancy cost to $29 a square foot. Viacom shareholders, no doubt, would be happy with the possibility of such a move.
“Long Island City has much more infrastructure and far better transportation than Williamsburg or Greenpoint,” the chairman of the Dynamic Group, Brad Zackson, said. “Major companies will come for the incentive programs and they will bring national retail to service office demand, which, in turn, will create more business. Long Island City has the best bones for development of residential, office, and retail over the next 10 years.”
Viacom has the opportunity to relocate to a number of new office sites in Long Island City, including the Silvercup West development and Tishman Speyer’s project on the site of the Queens Plaza parking garage. In December 2004, the president of Queens, Helen Marshall, announced the terms of the redevelopment of the three-acre site to be developed after the demolition of the existing municipal garage.
In 2003, the New York City Economic Development Corporation designated the site for mixed-use commercial development, with office space, a garage, and retail tenants. “We expect to construct 3 million square feet of state-of-the-art, efficient office space with large footprints, which will attract many corporate users,” a partner at Tishman Speyer, Jerry Cohen, said.
“We are strong believers in the future of Long Island City,” the president of Silvercup Studios, Stuart Match Suna, said. “We see the potential for a media and entertainment center with the development of Silvercup West.” His development is a 2.7 million-square-foot mixed-use facility that includes 650,000 square feet of office space, 350,000 square feet of studio facilities, 150,000 square feet of retail, 1 million square feet of residential apartments, parking for 1,400 cars, and two acres of public outdoor space on the East River at a cost of $1.2 billion. Silvercup West should be completed by 2010.
Harry, Alan, and Stuart Match Suna developed Silvercup Studios in 1983, after they acquired the former Silvercup Bakery in 1980. “Since the day we opened the studio, all of our studios in the original building and a second location have been occupied for nearly 365 days a year,” Mr. Suna said. Silvercup Studios is the largest full-service production facility of its kind in the Northeast.
Long Island City is also the home of Kaufman Astoria Studios. The original Astoria Studios has been making entertainment history for 85 years. Its doors were opened by the legendary Adolph Zuckor in 1920. Eventually, the studio became a home for Paramount Pictures, and over the course of 20 years more than 120 silent and sound films were produced at the studio.
At the start of World War II, the studio was taken over by the U.S. Signal Corps and became known as the Army Pictorial Center. The building eventually fell into disrepair, until a nonprofit foundation reopened the big stage in 1977 for the production of “The Wiz.”
In 1980, New York City turned to real estate developer George S. Kaufman to renovate, expand, and revive this national landmark. Since its rebirth in 1980, Kaufman Astoria Studios has established itself as one of the largest and most sophisticated film and television production centers on the East Coast. As a full-service, turn-key facility, it is equipped to handle every conceivable size, style, and type of production, including film, video, commercials, music, sound, or studio photography. Major motion pictures, independent film, television shows, and commercials are produces at KAS.
It’s not just the entertainment industry that has been flocking to LIC. Over the past 20 years a number of financial service firms have relocated trading floors and support staff to Queens as well as Brooklyn.
In the late 1980s, in an attempt to keep Wall Street firms from moving to New Jersey, the Board of Estimate approved funding for Forest City Ratner’s Metropolitan Technology Center — MetroTech — which would transport 6 million square feet of office space over eight new high rise buildings in downtown Brooklyn.
More than 6,000 employees of Chase Manhattan Bank relocated to MetroTech and other companies, including Bear Sterns & Co, Brooklyn Union, Securities Industry Automation Corporation, and Chase Manhattan Bank, relocated large portions of their back offices to these new buildings.
In February 1989, Citibank relocated thousands of employees to its new 50-story, 1.4 million-square-foot One Court Square and a four-story service wing, which have direct access to the E, F, and G subway lines. Last year, Citibank sold the building to Reckson Associates Realty for $470 million. This August, SL Green Realty, the landlord of 1515 Broadway announced plans to merge Reckson Associates Realty into the company. One of the properties that SL Green plans to retain with the merger is this building.
Next year, more than 1,800 employees will be relocated to the new 15-story, 550,000 square-foot Court Square Two building, presently under construction by Citigroup. The building will house the national headquarters for Citibank’s credit card division and branch banking headquarters. About 40,000 square feet of retail will be available on the site.
The United Nations Federal Credit Union will be relocating its headquarters and support staff early next year to a new 17-story, 250,000 square-foot office tower at 24-01 44th Road in Long Island City. The credit union is presently headquartered at 820 Second Ave.
The New York Blood Center is building an 80,000-square-foot building at 10-01 45th Road and is expected to open early next year. Alam Realty is renovating a former warehouse at 31st Street and 37th Avenue into a sleek glass and steel office tower. The tower will have a total of 110,000 square feet, with each floor about 22,000 square feet.
“One of the fundamental factors that one has to recognize when evaluating the viability of Long Island City for commercial and residential development is the quality of the developers who are vested and have made a commitment to the community,” the president of Shalom Zuckerbrot Realty and principal of Octagon Properties, Frank Zuckerbrot, said. “Prominent companies and developers, including Avalon-Bay Communities, Toll Brothers, Kaufman Management, Tishman Speyer, the Fiel Organization, Jerry Wolcoff, Rockrose, and Lloyd Goldman, have one thing in common: a commitment for the redevelopment of Long Island City.”
The Long Island City waterfront is undergoing an ambitious redevelopment, economic revitalization, and growth. Rockrose Development, owned by the Elghanayan brothers, is the dominant player in this renaissance, having been designated by the Queens West Development Corp. to build seven residential buildings totaling more than 3,000 units at what is referred to as the former Pepsi Site. It will be known as East Coast, Long Island City, offering “waterfront living with skyline views” that will eventually be home to more than 250,000 residents. This will be the first luxury development of its kind in Long Island City.
The first such Long Island City building is a magnificent 32-story glass tower with 498 residences designed by Arquitectonica. The building opened in August and already is more than half occupied. Many people are moving to take advantage of this unique waterfront living experience, located only one stop from Grand Central Terminal. The second building is scheduled to open in late 2007.
Across the street from the Rockrose development, construction is under way on AvalonBay communities’ second building, “Avalon @ Center Boulevard,” a 30-story, 604,000 square-foot, 550-unit rental apartment building with 65,000 square feet of retail.
“Long Island City is arguably the most underrated neighborhood in all of New York City,” the vice president of development for Toll Brothers, David Von Spreckelson, said. “You would be hard-pressed to find a place with better transportation alternatives, especially someplace so close to Manhattan. The site that we are developing is one stop to Grand Central on the train, a short walk to the Long Island Railroad, the Midtown Tunnel. The Long Island Expressway is around the corner and the water taxi is not far away.”
The Toll Brothers site is at the corner of 5th Street and 48th Avenue. The building, called 5th Street Lofts, is new construction of 118 condo residences.It will be open for sale toward the end of this year and occupancy will begin in October 2007.
More than 35 developments projects are in various stages of construction in Long Island City. Two hotels are in planned at 40-01 29th Street and 29-02 39th Avenue. Seven large-scale projects are on the horizon representing close to 8.3 million square feet. They should be completed over the next five years.
The big issue with Long Island City is the lack of community services, such as a real supermarket or a major drug store. Now, though, some of the amenities are coming into the community. A pharmacy has opened on 21st Street, and the increase in office and residential tenants is helping the community.
Community leaders and bank executives gathered at 21st Street and 36th Avenue in Long Island City yesterday to announce that Amalgamated Bank would soon open a full-service branch there.
“New bistros and boutiques are opening all the time on Vernon Boulevard and Jackson Avenue,” Mr. Von Spreckelson said. “There are a whole host of cultural institutions in the neighborhood and a real artist’s scene. Yet the price of housing has not jumped the way it has in other hot neighborhoods outside of Manhattan. There is still the sense for buyers of condos in Long Island City that they are getting on the ground floor. You don’t have this situation in many neighborhoods that have such great transportation and other amenities already in place.”
Said Mr. Suna: “We are now seeing young mothers and nannies on Queens West, and once we get a true 24-7 community, you can support a lot of local amenities.”
“Long Island City is a seven-minute commute to Midtown Manhattan,” the owner of Besen & Associates, Adelaide Polsinelli, said. “It was just a matter of time that it would be recognized as an extension of Manhattan.”
It is clear that Long Island City will reach the critical mass needed to make it the fourth central business district and a major home of residential housing.
Mr. Stoler is a television broadcaster and a Senior Principal at a real estate investment firm. He can be reached at firstname.lastname@example.org.