With $6 Billion In Infrastructure Improvements Nearing Completion, Developers Now See Deepening Interest From Investors and Tenants In the Once-Stalled Project
With three towers totaling more than 8.6 million square feet under construction to reclaim the World Trade Center site skyline over the next three years, it’s easy to forget that what may be the largest private real estate project in U.S. history is rising a few miles to the west.
Construction is now moving forward at a rapid clip in and around Hudson Yards, a project considered breathtakingly speculative five years ago during the downturn and viewed cautiously by investors as recently as six months ago. Concrete is pouring for the first 52-story office building known as the South Tower at 30th Street and 10th Avenue.
The 1.7-million-square-foot, 895-foot tall tower is scheduled for completion on Manhattan’s far West Side in 2015. Leather-goods retailer Coach Inc. has leased 740,000 square feet to anchor the building, and cosmetics maker L’Oreal SA and SAP AG, a German software company, have leased 402,000 and 115,000 square feet, respectively, bringing the building to more than 85% committed. In a deal announced last month, supermarket chain Fairway will occupy 46,000 square feet of retail.
Related, Oxford, and architect/master planner Kohn Pedersen Fox (KPF) will pair the building with another spire, the 69-story North Tower, with Time Warner reportedly negotiating to relocate into 1 million square feet, leaving its current headquarters at Columbus Circle. Once that deal is complete, Related will begin construction of a mammoth platform over the rail lines.
In all, The Related Companies LP and Oxford Properties Group Inc. are developing up to 16 high-rises totaling more than 13 million square feet of office, residential, hotel and retail space on 26 acres at the site bordering the West Side Rail line along the Hudson River.
But Related and Oxford are hardly the only developers active in the area, which will eventually see at least 18 million square feet of construction, making it one of the largest private real estate projects in U.S. history.
The $15 billion project includes up to $6 billion in public infrastructure investment, anchored by the extension of the No. 7 subway train line to 11th Avenue and 34th Street. Public dollars are also funding the renovation and expansion of the Jacob Javits Center.
The entrance of the new subway station opens right at the entrance of a competing project, the Moinian Group’s 3 Hudson Boulevard site, planned as a free-standing, 1.8 million-square-foot mixed-use tower on a full city block at the northwest corner of 34th Street and 11th Avenue, bordering the Hudson Park and Boulevard green belt.
"The size and scope of what is happening in the Hudson Park district is simply unbelievable," says Arthur Mirante, the tri-state area president of Avison Young, who is heading Moinian’s efforts to secure an anchor tenant for at least 400,000 square foot prior to the start of construction of the 66-story 3 Hudson Boulevard tower. "An immense amount of public infrastructure money has already been invested in the Hudson Yards district. The response by the private sector has also been to invest -- to buy the land and control the development sites as this public money is being spent."
"The momentum for the Hudson Yards district is amazing and I think it will continue to surprise people," Mirante added. "Almost every week, there’s another land acquisition. It's getting less and less speculative, and land prices are going up."
Last week, a group led by Boston developer and former L.A. Dodgers owner Frank McCourt acquired a site directly across the street and south of the under-construction South Tower.
Two other development sites north of the Moinian site were acquired three weeks ago, one likely slated for a hotel and another for an office building.
Related recently acquired a site just south of the Moinian development from Extell Development. Brookfield Properties is building a $680 million platform over the rails that will be home to Manhattan West, comprised of two office buildings, residential and park space.
Mirante is speaking with four companies that could potentially anchor the Moinian office tower.
Oskar Brecher, director of development for the company founded by Joseph Moinian, said the buildings at the epicenter of the far West Side have much more flexibility following a 2005 re-zoning of the area from industrial to commercial and residential.
The new flexibility will allow Moinian to work with the potential anchor to determine whether the upper floors of the 1,000-foot-tall building will be residential, office or some combination of the two, said Brecher, whose team oversees nearly 10 million square feet of development across the U.S.
"We will work with the anchor tenant to see what is in the best interest, because ultimately they will drive the direction of the development," he said.