Going Gets Tough for the U.N.
The world body needs a new headquarters while it renovates, but real estate options for a 191-nation bureaucracy are limited in New York.
By Maggie Farley
Times Staff Writer

June 26, 2005

UNITED NATIONS — The U.N. has to move out of its asbestos-ridden, dilapidated headquarters soon for a five-year renovation. But when the world's slowest bureaucracy meets the world's hottest real estate market, can it move fast enough? 

For nearly a year, real estate agents have been looking for enough space nearby to accommodate the U.N.'s nearly 10,000 employees during the renovation, which is supposed to begin by 2007. Now, they think they've found it. Just a few blocks away, at 47th Street and Lexington Avenue, there's a skyscraper that seems to have everything: convenience, nearly 1 million square feet of space and a relatively short lease. And, like most property in New York's bubbling market, it has something else: competing bidders.

Although a corporation can strike a deal quickly, the U.N. must have the approval of all 191 members of the General Assembly before it can enter negotiations with the building's owner, S.L. Green. U.N. officials worry that by the time the General Assembly gets around to signing off on it, the space will be gone. 

We need to get going, said Mark Malloch Brown, chief of staff to Secretary-General Kofi Annan. The challenge is how to somehow preserve the space until the General Assembly votes on it in September.

The options are limited. Some cynics, weary of traffic jams caused by diplomats' motorcades, have suggested that the U.N. move out of New York for good.

The real estate search committee has looked at property in Brooklyn, Governor's Island and Queens and even entertained the idea of holding the General Assembly on a cruise ship docked in the East River in front of the headquarters.

The problem with that is that it would interfere with the river's navigation channels, said John Clarkson, the officer in charge of the renovation. But we're not ruling anything out, and we're not ruling anything in.

On Friday, state legislators formally ruled out the U.N.'s preferred option of erecting a new building on a playground across the street, citing disenchantment with corruption in the oil-for-food program. Last week, a procurement official named Alexander Yakovlev resigned over allegations of nepotism and profiting from his position in awarding oil-for-food contracts. He was also assigned to supervise a $44-million design contract for the first stage of the renovation, a revelation that helped legislators pull the plug on the project.

U.N. officials hope the lawmakers will reconsider in time to let the world body erect a building on the playground to consolidate staff scattered in office buildings near the headquarters. The State Department even sent an envoy to Albany last week to pressure state lawmakers not to stand in the way.

From the outside, the shimmering, 39-story Secretariat tower looks radiant and majestic. On the inside, the 1950s furniture lends it a hip, retro feel. But because the U.N. compound is considered international territory, it is not subject to New York health and safety codes, and in times of financial need, maintenance and updating suffered most. 

Now, accountants figure, it will cost as much to maintain over the next 25 years as to rehabilitate the entire building. 

U.N. officials say that for safety reasons, they must begin renovations by 2007. On a dirty tour of the building, Clarkson demonstrated how every vent is backed with asbestos and can't be dismantled without spreading the carcinogen. 

On the 28th floor, an unshielded transformer emits such a quantity of electromagnetic waves, it interferes with computers and cellphones. The health effects of long-term exposure are unknown, but there are no offices on that floor just to be safe, he said. 

One year, the domed roof of the General Assembly building lifted off during a windstorm as diplomats were speaking inside. Construction workers tacked it back down, but the building where world leaders gather every September for the annual opening of the General Assembly session also needs a full overhaul.

If the General Assembly can't be moved to a cruise ship, then the U.N.'s large, private park on the north side of the building will probably house a collection of temporary buildings for its myriad meetings, said Christopher Burnham, the new U.N. undersecretary-general for management. 

But whatever happens, he wants it done quickly.

It has become a huge financial issue for me because every year or every day we delay adds to the cost of the project, Burnham said.

The General Assembly is considering accepting a $1.2-billion loan from the United States government to help pay for the renovation. Although the original loan to build the headquarters was interest-free, this one will carry 5.54% interest, making the eventual total cost more than $2 billion. Some member states are balking at the price tag.

Until the General Assembly agrees on financing terms, Annan cannot sign a lease. But they can still shop. 

This is New York real estate, Brown said. We are hoping that a handshake is enough.