Thursday, May 26, 2011

At MetroTech, NYU-Poly takes some unused office space off Forest City Ratner's hands; move pitched as "owning the square"

When I first wrote about New York University's astonishing absorption of the Brooklyn-based engineering school Polytechnic University, I thought it merely an intriguing (and severely under-examined) real estate story involving a principal of the MetroTech complex developed by Forest City Ratner and Polytechnic.

Now there's a more explicit connection. As the Brooklyn Daily Eagle reported, in an article headlined NYU-Poly Expands at MetroTech Center: Will Allow School to ‘Own the Square’ and Enhance 24/7 Downtown Community:
METROTECH — Going for a more dynamic, vibrant feel to its campus in Downtown Brooklyn, NYU-Poly, more formally known as the Polytechnic Institute of New York University, has signed a lease with Forest City Ratner for academic space in two Ratner-owned buildings at MetroTech.

First reported in the Wall Street Journal Tuesday morning, the lease for 120,000 square feet of space on the ninth and 10th floors of 2 MetroTech and the sixth floor of 15 MetroTech was confirmed by the Eagle late Tuesday afternoon. With work expected to begin on the leased spaces this summer, the university will be sharing more specifics about the moves and build-outs over the next few months, according to NYU-Poly President Jerry Hultin, who noted that it will be a process of phased-in moves.

“MetroTech Center has a great central commons area,” he said. “Expanding into buildings that flank the commons allows NYU-Poly to own the square, and imparts a more dynamic, vibrant feel to our campus.”
What's really behind it

Poly already occupies buildings around the commons--buildings with ground-level space flanking the open area--so I don't see how adding upper floors in office buildings makes the campus more dynamic.

Rather, it solves a problem for Forest City Ratner: getting office tenants into its properties. Remember, In the past year, as Crain's NY Business reported, NYSE Euronext moved out of roughly 387,000 square feet at 2 MetroTech Center.

We don't know if Poly is paying the rates expected from office tenants, but it's unlikely.

Update: Real estate broker Chris Havens tells the Brooklyn Paper that
NYU likely took advantage of a “fantastic deal” and that Metrotech space is “going cheap.”

“The biggest hole in Brooklyn is Metrotech — there’s lots of space there for lease,” Havens said. “It’s finally starting to go now. Education is the future of Downtown Brooklyn.”

The Commercial Observer added that the "20-year lease will include renovations on floors nine and 10 at 2 MetroTech and the sixth floor at 15 MetroTech, all of which is scheduled to begin this summer."

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