MetroTech was created in 1987 to keep Wall Street firms from sending their back-office operations to cheaper real estate in New Jersey. Yet now that the complex is almost finished, government agencies are leasing more than one-third of its 5.8 million square feet.
The agencies needed the space. The developer needed tenants. But the heavy governmental presence at MetroTech indicates that a significant portion of the urban renewal project, which required the city to condemn property and move residents and businesses out of the way, has gone not toward keeping private-sector jobs in New York City but instead toward providing civil servants with new offices.
Those leases are still being signed. In July 2003, the city’s Human Resources Administration’s information systems office moved into 193,000 square feet in MetroTech, for which it will pay $175 million over the next 20 years.
The high number of taxpayer-financed leases suggests that the original plan may have overestimated demand for back-office space or the willingness of companies to move across the East River. As preparations get underway for the development of additional office space in downtown Brooklyn, economic planners are counting on a swell of new interest in the area, primed by the groundwork already laid by MetroTech and the increased cachet of Brooklyn as a place to live and work.
James Stuckey, Forest City’s executive vice president for commercial development, says that MetroTech needed the public agencies to lure other tenants. “From day one, it was always the strategy of the city to use city agencies as a way of turning the key, of getting people there,” Stuckey says, “by creating a more business-friendly environment, knowing that it was a struggle at times for a private sector company to see the benefits of moving downtown, what with safety and all these other issues.” In 1987, Stuckey was president of the city Public Development Corporation, which was MetroTech’s government sponsor.
But the minutes of public hearings held at the time do not mention government tenants. In fact, the Planning Commission resolution specified that the sites should be used for commercial or academic purposes, with 175,000 square feet put aside for retail.
Public agencies occupy 2 million square feet, or 35 percent of the floor area, in MetroTech’s 10 buildings, according to figures from Forest City and government tenants. That includes about 860,000 square feet rented by the city–most of it for a new fire department headquarters that replaced the one on nearby Livingston Street, and for HRA, which moved its data center from Chelsea.
In each case, the city agency needed modern office space that could accommodate high tech equipment, according to Jennifer Blum, spokeswoman for the Department of Citywide Administrative Services. The city does not take bids for office space, she says, but instead uses consultants to find the cheapest, most appropriate property.
The Internal Revenue Service leases another 208,555 square feet. The state court system, which has struggled with overcrowding for years, will occupy 950,000 square feet in a new tower at 330 Jay Street that is almost complete.
Stuckey says that it is cheaper for the city to rent space from a privately constructed building than to build one itself. By renting in MetroTech, the city isn’t foregoing any property taxes, since Forest City already has 25 years of tax breaks. The developer predicts MetroTech will generate $54 million in taxes a year once those incentives expire. Its vacancy rate remains extremely low.
Janel Patterson, a spokesperson for the city’s Economic Development Commission, emphasizes that MetroTech has created essential momentum for further investment in the area. “With nearly three million square feet of space occupied by private companies, it is a great example of what we can expect to accomplish with the Downtown Brooklyn Plan,” she said in a statement. Two major private companies have moved into Brooklyn recently, both refugees from lower Manhattan: the Bank of New York, which is seeking to spread out its operations, and Empire Blue Cross Blue Shield, which had offices in the World Trade Center.
The downtown redevelopment plan predicts that 6.7 million square feet of new construction will go up in the next decade, displacing 130 apartments and 100 small businesses. Most of the square footage is supposed to be office space, again aimed at capturing the back-office market. Michael Burke, director of the Downtown Brooklyn Council, which conceived the plan, says there is little chance that the new buildings will be used for government offices.
“My feeling is that the city has been and is currently consolidating operations in downtown Brooklyn,” he said. “I don’t see city government continuing in that direction. What we are really preparing for is the private sector.”