Hughes Corp. Buys a Seaport Block, Its Plans for the Property Unknown

The block, known as 250 Water Street, purchased by Howard Hughes Corp. for $180 million. Community Board 1 and others have fought large-scale development on the site because of the district's historic, low-rise character. Photo: Tribeca Trib

The Howard Hughes Corp. announced on Tuesday that it is adding a full square block lot to its substantial holdings in the South Street Seaport neighborhood. The company bought 250 Water Street, now a one-acre parking lot bounded by Peck Slip, Pearl, Water and Beekman, from the family-owned Milstein Properties for $180 million.

“The company’s vision for the site is currently in the initial planning stages and will be announced at a later date,” the statement said.

Along with the site of the New Market Building, which is slated for demolition, Howard Hughes Corp. now controls a second major undeveloped Seaport property, with no announced plans for either one. In addition to 250 Water Street, the company altogether controls 450,000 square feet in the Seaport and has an interest in the Mr. C hotel at 33 Peck Slip.

“This acquisition represents another major step forward in making the Seaport District a vibrant destination and an anchor of the rapidly growing Lower Manhattan community,” Howard Hughes executive Saul Scherl said in a statement.

Milstein, which bought the property in 1979 for a reported $5.8 million, had proposed at least a half dozen projects on the site, both residential and commercial, only to meet stiff resistance from Community Board 1 and others. In 2003, after Milstein had proposed a 14- and 24-story apartment complex, the city downzoned the area, limiting the building height to 120 feet. The rezoning also drastically reduced a building’s allowable size from 480,000 square feet to 290,000 square feet. Milstein claimed a profitable building was impossible under those restrictions and said it would keep the property as a parking lot.

There is speculation that Howard Hughes might attempt to build a much bigger project on the site by transferring hundreds of thousands of square feet of air rights from its Pier 17 and Tin Building properties, and possibly the New Market Building, as well.

But none of those parcels, in the language of the Department of City Planning’s zoning text, are “granting” sites, meaning that the developer cannot now transfer development rights from them. In addition, 250 Water Street is not a “receiving” site. For that to change, the city would have to amend the zoning map, according to a City Planning document that details the rules and restrictions for transfering development rights in the Seaport. Such an action would require a rigorous public review process and sign-off by the City Council.

Community Board 1, which fought for the downzoning of the Seaport District years ago, would be part of that review. “The community board worked very hard to limit the development and the F.A.R. [Floor Area Ratio] and the allowable height because the Seaport is a low-scale district,” said CB1 member Paul Goldstein, who as the board’s district manager during those years was heavily involved in the rezoning effort. “We had that attitude throughout the time the Milsteins owned the property. I don’t see why that would change because Howard Hughes owns it.”