400-unit rental at 250 Water Street in South Street Seaport can move forward

A 400-unit rental planned for a parking lot in the South Street Seaport historic district can officially move forward, ending a multi-year legal saga over the site. The New York Court of Appeals on Tuesday rejected a challenge from preservationists who opposed the Howard Hughes Corporation’s $850 million project at 250 Water Street. With the ruling, and the extension of the 421-a tax break, the developer can proceed with constructing the 27-story mixed-use development.

Howard Hughes received approval for the Lower Manhattan project from the Landmarks Preservation Commission in 2021 after scaling down the tower considerably, cutting the height from the originally proposed 1,000 feet to later 474 feet, to finally 324 feet. The City Council approved the plan in 2022.

Made up of three neighborhood groups that opposed the project, the Seaport Coalition sued Landmarks over the ruling in 2022. Justice Arthur Engoron sided with the coalition the following year. He described the $40 million Howard Hughes agreed to pay for air rights from Pier 17 and the Tin Building to benefit the South Street Seaport Museum as an “impermissible quid pro quo” between the developer and LPC.

Last June, the appellate division of the New York State Supreme Court overturned Engoron’s ruling and the Seaport Coalition filed an appeal. This week’s Court of Appeals ruling allows the appellate division’s decision to stand and the project to move forward.

Since the developer broke ground at 250 Water Street in 2022, completing environmental remediation and getting a foundation in place, the project also qualifies for the 421-a tax exemption, which was extended by five years by the state legislature last month.

According to Howard Hughes, the project “has cleared all existing impediments to construction.”

“For too long, the lot at 250 Water Street has been an underutilized part of the Seaport,” David O’Reilly, Howard Hughes CEO, said. “Today’s decision marks a major win for Lower Manhattan and the city and paves the way for Seaport Entertainment Group to begin construction on a vibrant, mixed-use project that will be a significant contribution to the neighborhood.”

Designed by Skidmore, Owings, & Merrill, 250 Water Street will include roughly 400 market-rate and affordable rental apartments above a five-story base. There will be commercial, retail, and community space within the base.

Howard Hughes, which bought the Water Street site for $180 million in 2018, also owns the Seaport’s Pier 17 complex and the Tin Building.

Several plans to develop the Water Street parking have been proposed over the last three decades. As 6sqft previously reported, the LPC has rejected nine different proposals for the site over the last 25 years.

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