New Housing to Benefit as Citigroup Sells Queens Site
Citigroup sold One Court Square in Long Island City, above, in 2005. The area has been inundated with residential development.
By CHARLES V. BAGLI
FEB. 23, 2015
In 1989, Citigroup, the financial services giant, erected New York City’s tallest tower outside Manhattan in Queens, where city officials hoped to establish a new commercial district.
A few years later, the bank, once the largest in the world, put up a second, smaller building next door. But the office district in the Long Island City neighborhood never quite caught on.
Now, Citigroup is selling an adjacent development site that will most likely house an apartment complex in what has become one of the city’s hottest residential neighborhoods.
The bank could receive as much as $150 million for the site, nearly one acre bound by 44th Road, 23rd Street and 44th Drive in Court Square, according to real estate brokers.
Construction cranes rise on seemingly every corner in the neighborhood as developers rush to meet the demand for housing. Housing construction is also a priority for Mayor Bill de Blasio, whose administration plans to rezone Long Island City to spur additional construction.
The neighborhood, which is well served by public transportation, has become an appealing place to live because of its proximity to Manhattan.
Edward Skyler, a spokesman for Citigroup, said, “Given the direction of our real estate footprint and the city’s need for housing, we believe that this site has great potential that can be unlocked.”
In an email to employees about the sale, Citibank said: “We recognize that the creation of housing is important to the city of New York and we will certainly be taking the city’s priorities into account during the process.”
The bank hired Jones Lang LaSalle, a broker, to sell the property. Under the current zoning for the site, a developer could build a 40-story tower with hotel, retail, apartment or office space.
But if the property sale marks a shift in the neighborhood from commercial to residential development, it also is another sign of Citigroup’s diminishing presence in the city.
Citigroup had originally planned to build a third office building on the property. But the bank, like other financial institutions, was battered during the recession. Since then, it has sold over 60 businesses, including hedge funds, private equity funds and insurance companies.
The bank has also come under scrutiny from regulators and federal prosecutors for its role in the residential mortgage crisis. And in November, Citigroup and five other banks agreed to pay a combined $4.25 billion to settle with regulators in the United States and Britain. The Justice Department is pressuring Citigroup and other banks to plead guilty to criminal charges related to the manipulating of the prices of foreign currencies.
Since 2007, Citigroup’s worldwide payroll has fallen to 240,000 employees, from 375,000. In New York City, the bank now has about 17,000 employees, down from 29,000 seven years ago.
It has also sought to pare its real estate costs. The bank is moving its headquarters from Park Avenue in Midtown to Greenwich Street in Lower Manhattan.
But in the 1980s, Citigroup, then known as Citicorp, was in a more expansive mode. City officials had hoped that the bank’s decision to build a 50-story tower in Long Island City, fueled by a substantial subsidy package, would be the first step in creating a lower-cost commercial district that would attract Manhattan tenants considering a move to New Jersey.
At the time, Mayor Edward I. Koch invoked an “other boroughs” strategy, using tax abatements, low-cost electricity and other incentives to lure companies to Queens.
The green-glass Citigroup tower, now called One Court Square, opened in 1989, drawing thousands of bank workers to a quiet neighborhood that was a short subway ride from Manhattan.
The bank went through a round of layoffs during the recession in the early 1990s and moved thousands of employees to buildings in Jersey City. Years later, Citigroup moved 700 more employees to Jersey City from Lower Manhattan.
In 2007, Citigroup built a second, 15-story building, Two Court Square, as part of its original agreement with the city. It was supposed to be the first phase of a 1.5-million-square-foot development.
Instead, the bank sold six floors of Two Court Square in 2010 to the City University of New York School of Law. Citigroup sold One Court Square for $470 million in 2005, but continued to lease the building, where there are about 4,800 employees.
Citigroup also plans to sell its remaining stake in Two Court Square. As for the 50-story tower, Citigroup told employees on Monday that its lease at One Court Square runs “into 2020, and we expect to continue to have employees there through at least that time.”
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“Office buildings are our factories – whether for tech, creative or traditional industries we must continue to grow our modern factories to create new jobs,” said United States Senator Chuck Schumer.