MTA to buy Grand Central Terminal for $35M
Via Wikimedia
The Metropolitan Transportation Authority is set to purchase Grand Central Terminal for $35 million, a deal which will give the agency more control over development projects happening at the space. Expected to be approved by the MTA’s full board Thursday, the sale ends the 280-year lease that began in 1994 and gave the agency a one-time window to buy the station. Along with the famed terminal, the sale also includes miles of track on Metro-North’s Harlem and Hudson lines.
The properties are currently owned by the private holding company, Midtown Trackage Ventures. The company acquired assets that formerly belonged to PennCentral Transportation, the railroad whose 1970’s bankruptcy led to the MTA’s management of regional rail. Currently, the MTA pays over $2 million each year to rent Grand Central from the holding company.
To secure investment for the terminal’s $200 million redevelopment in the 1990s, the MTA signed the current lease through 2274, which included an option to buy in 2019. Janno Lieber, the MTA’s chief development officer, called the deal a “no-brainer, from a financial standpoint.”
“We had to exercise the option to purchase or remain a tenant for another 270-plus years,” Liber said. “And the interest rate environment – and the $500,000 discount offered by the seller – means it’s cheaper to buy it now than to pay rent for all that time.”
In addition to saving money, the deal also gives Metro-North more control over its operations and the ability to earn more revenue through development projects. As the new owners of the Harlem and Hudson lines, the MTA can earn profits from any developments built close to the tracks.
Plus, the MTA will have greater authority over Grand Central as Long Island Rail Road arrives, part of the delayed and pricey East Side Access plan. As 6sqft reported in April, the project’s price tag has jumped dramatically, from early estimates of roughly $2.2 billion to now over $11 billion.
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