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New York's Museum of Modern Art has been transformed by Taniguchi and Associates in a $425 million project, making it a must-see building on a visit to the city

While MoMA has held the world's foremost modern art collection, its accommodation has not been in the same league. Founded in 1929 and on this site since 1932, its first purposemade step was the striking Modernist building by Goodwin & Stone of 1939. MoMA's premises have grown by accretion since but without an apparent overall vision.

The gradual purchase of most of the other buildings in this block - between Manhattan's 53rd Street to the south and 54th to the north, between 5th Avenue and 6th Avenue (Avenue of the Americas) - has made space for growth.

While MoMA does not have the frontages on 5th and 6th, the step-change came with the purchase within the block of the large Dorset hotel. The hotel's demolition, combined with a mix of conservation, renovation and new build, could set MoMA up for the 21st century. As well as upgraded and larger galleries, it needed improved facilities for education and staff.

A very thoroughly run competition included visits by the MoMA committee to the projects of 20-30 architects before it arrived at a long list of 10. This was whittled down to a shortlist of three through submission of sketch ideas exploring their approach to architecture.

These three were Taniguchi and Associates, Herzog & de Meuron and Bernard Tschumi.

More detailed design proposals and models were submitted before Taniguchi emerged the winner. MoMA director Glenn Lowry says he was selected because his architecture is 'ethereal and elegant yet forceful and beautiful'. Not your average client. Yoshio Taniguchi remembers the announcement of his win coming on 7 December 1997, the anniversary of Pearl Harbour.

Taniguchi is an interesting choice. Everything the Harvard-educated architect has done since setting up his own practice in 1975 has been in Japan, mostly art galleries and museums. Almost everything is new-build and stand-alone. He had never before entered an international competition. And his architecture is the opposite of the hustling, nervous energy of New York. It comes much nearer to the detached calm of the temple and the tea house (see pages 36 and 37 for more on Taniguchi's architecture in Japan).

In Japan his detachment has been created either on open sites or by using the building to create a sanctum in the non-plan of urban Japan, the building focusing inward. In New York, MoMA already stood tight to the back of the sidewalks on the busy 53rd and 54th streets, and much of these two frontages was already established.

When Taniguchi won he was offered the chance to throw away his initial designs and start again. MoMA was confident it had found the man for the job. The spirit of the place was to have much of Taniguchi's detaching calm.

In fact Taniguchi says he kept about half of what he had submitted earlier. The big moves remained. There is a new, direct, public link between 53rd and 54th streets (something several competitors suggested). A radical transformation within the site creates a new centre of gravity further west where the hotel had stood. This is built round the three poles of entrance, atrium and sculpture garden, intriguingly kept somewhat separate. There is no single big central gesture. Even so, his soaring atrium is a rarity in New York; such spaces, on the scale of, say, Grand Central, can be counted on your fingers with some to spare.

On 53rd and 54th streets Taniguchi has very successfully balanced the transition from street-buzz to inner-calm. He picks up the height and rhythms of the other MoMA buildings and the local context, creating a New York development. At the same time the new facades, mainly through the choice of materials and their quiet articulation, presage the contemplative realm within.

Reading from the east on 53rd Street, in MoMA's view the main public frontage, the Philip Johnson addition (1964) and Goodwin & Stone facades have been refurbished, the latter including matching glass from the manufacturer of the original in 1939.

A new entrance here leads to the restaurant and education centre. Pelli's 29-storey residential tower (built in the 1980s as a contra-deal to fund the western museum extension development) is no more incongruous than many a new York intervention. Then comes the glazed entrance and a new plane of polished black granite fronting galleries, the stone joints hardly noticeable, the sheer plane aligning in height with the Goodwin & Stone and Johnson buildings. And running along the sidewalk beneath this stone plane is a glazed slot fronting the shop.

There are offices for staff above this, some initially sublet, but the small tower is set back so as to be hardly visible from the street.

On 54th Street, the new eight-storey education block to the east and six floors of galleries to the west, again clad in impenetrable black stone, are bookends to Philip Johnson's sculpture garden, each bookend obliquely seen from the street to open onto the garden through glazed walls within picture-frame canopies. In contrast to the 53rd Street sidewalk glazing, on 54th the sidewalk strip is clad in light corrugated metal, except for the glazed entrance. This metal works for the bookends in a back-of-building sort of way. Where it clads the sculpture garden wall it feels particularly unwelcoming, though it is difficult to see how it could have been much improved. Security for sculptures and the sense of a walled garden when experienced within the museum are the benefits. And you are drawn in by the glimpses over the garden wall. At least there are gates at either end of it.

The entrance lobby is a long slot directly between 53rd and 54th streets, spacious but not grandiose, part of Taniguchi's gradual unfolding of spaces. It houses information and ticketing and provides another access to the shop and restaurant. You must turn east to see through to the sculpture garden, and then climb to the first floor to reach the atrium. And from that atrium you can see beyond, through wall slots, the circulation of the galleries surrounding it. These main spaces - entrance, garden, atrium - are connected; you can see through from one to the other. But the drama is not thrown away in a single Portman-hotel-style climax. Rather this unfolding of one space into another sets up the new legibility, with the garden a readily accessible outdoor space and the atrium at the heart of the galleries, which begin on the first floor. The stairs, very simply articulated but ceremonially placed, help set a relaxed pace. Perhaps surprising to us, but not new to Taniguchi's work, a row of broad round columns runs down the centre line of the entrance slot. These are both sculptural and for wayfinding, with another short row running at right angles directing you toward the sculpture garden and main stair.

Photographs don't quite give the scale of the atrium, 34m high, with its flow into surrounding spaces. Architecture & Design curator Terry Riley measures it in Serras; MoMa has five Serra sculptures. Before, only the smallest two could be displayed. Now, he says with relish, the atrium could show three at once.

It was Taniguchi who suggested inverting the previous chronology of exhibition layout from earliest to latest as you moved up the building. Now if you have come just to see the early Moderns, such as the Picassos, you will have to go high. The first gallery you come to, on the first floor, nearly 7m high, is for contemporary art, a symbol of MoMA's commitment to the 21st century.

Curatorial rethinking is also moving on from the linear time-line history of art to something much more interconnected and contingent. It is reflected in Taniguchi's gallery planning, where enfilades of rooms are no longer appropriate Galleries are simple, background spaces, though their interconnection is full of variety, avoiding regimentation. Some galleries, such as those for architecture and design, are relatively small and feel quite domestic in scale;

for some of this space, as for the painting and sculpture gallery above, floor-edge balconies look down onto the sculpture garden.

The neutrality of gallery spaces, more neutral than in Taniguchi's earlier buildings (where displays often hardly change), is a reflection of the greater need for flexibility here. Not least because, while MoMA is best known for painting and sculpture, there are five other departments - architecture and design, drawings, photography, prints and illustrated books, and film and media - any of which could rise or fall in relative importance in future years. The neutrality is also because the curators have limited Taniguchi's customary use of daylight to create more enclosed spaces.

The top floor for temporary exhibitions does have skylights, but beyond the atrium, Taniguchi's characteristic daylighting animation is curbed.

Apart from improvements to artificial lighting, the Goodwin and Stone galleries are refurbished, rather than transformed.

The rear of that building, alongside the sculpture garden, is another matter. On each floor this rear is opened up with an added corridor that has white etched glass toward the garden, creating a white wall. Internally these corridors create a clear east-west route, both for now and if MoMa should continue expanding along the block in future.

Seen from the garden, the white glass should read as a neutral surface, shifting visual emphasis to the bookends with their clear glazing, and helping to pull together what is rather a long, thin space. In practice, this white glass effect, so clear on the computer visualisation, like a Shoji paper screen, rather fades when lights are on and the white glass becomes transparent.

Of much greater benefit in reviving the sculpture garden, largely reinstating Philip Johnson's 1965 design, have been the replanting and remaking of the cafÚ terrace at the base of the Goodwin and Stone and Johnson buildings, with cafÚ and restaurant at ground floor now opening onto it.

Another neat move is the treatment of the base of the Pelli tower within the garden, making it a pivot in the design. The part of the tower's lower six floors which is visible in the garden, is reclad in dark glass within the garden, retaining Pelli's original grid;

and where its wall becomes part of the interior lobby, it is clad in matt black granite, so matt that it could be felt. Taniguchi's interior use of stone is often more foreground than background, a contrast to the reserve of the metal, glass and white plaster.

I am sure MoMA will disagree, but by many standards, funding appears to have been relatively straightforward. A total of $858 million was sought - $425 million for the project, the rest an endowment for the future. More than $500 million was raised from the Trustees alone. The fund is well past $700 million today. Yet despite this project cost, for Taniguchi it is the first time he has had to fight over costs. (Some of his Japanese museums have been funded at twice the cost of MoMA per square metre, and costs in Japan are agreed in advance. ) The result, by New York standards, is very good build-quality; the refinement of Taniguchi's design is expressed.

MoMa director Glenn Lowry said of Yoshio Taniguchi that he is 'an architect who is not afraid to underplay his hand. He can be forceful but knows when to be restrained.' And that MoMA is 'not destination architecture.' Certainly it does not seek to compete with blobs and shards. But the project is such a transformation, and such a refined work of architecture, that surely it will become a destination for architectural pilgrims, a must-see in New York.

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