The Wall Street Journal
September 17, 2012
Pace University, which has been steadily growing in the region since 1906, is cranking up its expansion as it moves to develop a distinct campus district in Downtown Manhattan.
Pace is developing additional student housing downtown and launching other projects such as a new home for its performing-arts program which includes acting, musical theater and commercial dance. “We have a very deep commitment to this part of New York,” says Stephen J. Friedman, the university’s president.
In its most recent move, Pace University signed a deal with SL Green Realty Corp. to develop a new 29-story residence hall at 33 Beekman St. in downtown Manhattan, a 129,000-square-foot building which will house approximately 600 students.
The development is slated for completion in the fall of 2015. SL Green also working with Pace to develop a 24-story, 609-bed residence hall and retail space at nearby 180 Broadway, which topped out in April and will be completed by early 2013. Both new buildings will feature amenities such as kitchens, fitness centers and recreational lounges with televisions, couches and pool tables.
While many still view Pace as a commuter school, “that is no longer the case,” Mr. Friedman says. “As enrollment is steadily increasing, more students want to live on campus.”
Pace’s expansion is the latest sign that building by institutions is boosting New York’s construction industry at a time that spending by the private sector has been flagging. Overall construction spending in New York City reached $27.4 billion in 2011, a 3.5% decline from 2010, when total spending was $28.4 billion, according to a New York Building Congress analysis of McGraw-Hill data. Construction spending as of May 2012 was down 12% from its peak year of 2007.
Other construction projects in the pipeline include Columbia University’s Manhattanville expansion; New York University’s development in Greenwich Village; and Cornell University’s CornellNYC Tech on Roosevelt Island. In addition, the City University of New York has plans for more than $2.1 billion worth of construction over the next five years, while Fordham University is also in the early stages of its Lincoln Center campus expansion.
The Pace story began more than 100 years ago when brothers Homer and Charles Pace borrowed $600 to start an accounting school near City Hall. Pace steadily expanded into a full private university with bachelor’s, master’s and doctoral programs in the liberal arts, business, law, nursing and other fields. Today it has close to 13,500 students at its three campuses in Manhattan, Pleasantville-Briarcliff and White Plains, up from 12,700 students in 2008.
Pace’s first residence in downtown Manhattan opened in 1970. The school currently provides housing to 1,965 students, a figure that will grow by 1,200 when the new dorms open.
SL Green is teaming up with the Harel Group and the Naftali Group to codevelop the 33 Beekman building. Pace has signed a 30-year lease for both new buildings.
“Our relationship with Pace is somewhat different than our traditional multifamily business,” explained Andrew Mathias, president of SL Green. “In this case, Pace is the long-term leasehold condo owner and they find students to occupy the space.”
Last January, Pace also signed a 21-year lease for 140 William St. and is gut renovating that seven-story building to transform it into a new home for the performing arts program at Pace’s Dyson College of Arts and Sciences. It will include a 100-seat theater, sound rooms, rehearsal spaces, classrooms and a television studio, and will host public performances. The renovation, which is nearing completion, is partially funded by a $1 million grant from the Lower Manhattan Development Corp.
For SL Green, expansion in the industry of higher education represents a growing market that the company is eagerly pursuing. The deals with Pace have opened the door into new opportunities for developing residential multifamily housing, “an exciting area of growth for us,” says Mr. Mathias.
The building at 180 Broadway “was our first project built to suit for a college or university…and we are actively looking at other residential developments and other student housing type projects, given our great success with Pace,” Mr. Mathias says. “There is an enormous shortage of student housing as higher learning institutions continue to grow. Being able to offer students state-of-the-art housing in great locations is a competitive advantage for the schools.”
SL Green recently purchased a 20-story prewar elevator building at 1080 Amsterdam Ave., just south of Columbia University, which it will be converting into residential housing together with Stonehenge Partners. Though the project isn’t directly connected to Columbia, “the units may end up being occupied by students and others people around Columbia’s campus,” Mr. Mathias says.