If there was one thing to be learned from the bidding over the Coliseum site in the late 1990’s, it was that real estate developers needed to deliver more than money to win development sites from public agencies.
The Related Companies won that competition, even though it did not offer the most money, partly because its chairman, Stephen M. Ross, promised to put Time Warner, and several hundred jobs, in anything it built at Columbus Circle.
The secret has gotten around. The three teams that appear to have the strongest of the five bids to develop 26 acres in the West 30’s are the ones that recruited tenants for the site, according to a source familiar with the proposals that came in Oct. 11. So far, no details have emerged of how much money the developers offered the Metropolitan Transportation Authority, the owner of the property, or of just how firm those tenancy commitments are.
Mr. Ross is one of the three: He convinced News Corp. to move its headquarters from the canyons of Sixth Avenue to a wild and unsettled area on the far West Side. The agreement was first reported Monday on The Observer’s Web site. Related has also partnered with Goldman Sachs to finance the 12-million-square-foot project.
Meanwhile, a joint venture between the Durst Organization and Vornado Realty Trust has come up with its own ingenious strategy. It’s willing to take one of Durst’s current tenants—Condé Nast Publications—from a building in Times Square and build a new headquarters for it to the south and west. Presumably, now that Times Square is an attractive location for white-collar firms, it will be easy to fill the space Condé Nast vacates.
And Tishman Speyer has formed a joint venture with Morgan Stanley. The New York Times has reported that the investment bank will finance the development and also occupy a skyscraper on the eastern end of the site, close to 10th Avenue.
These three teams include some of the biggest titans in New York real estate.
Related is still glowing in the civic and financial success of the Time Warner Center. The Durst-Vornado combination represents a marriage of an old-fashioned New York real estate dynasty and a deeply capitalized publicly traded real estate investment trust. And Tishman Speyer is the developer du jour, thanks to its handy $5.4 billion acquisition of Stuyvesant Town and Peter Cooper Village last year.
A fourth bidder, Brookfield Properties, also made a strong bid but one without a tenant in hand, according to the source; Extell Development Co. joined the fray but is relatively inexperienced in large mixed-use projects of this sort.
In an interview with The Observer in July, Deputy Mayor Daniel Doctoroff said that having tenants would likely help the West Side bidders as it did for the Time Warner Center.
“They had a complete package, so we’d like to see something similar here, for a bidder to come forth with real tenants to occupy it, who can occupy as soon as it is built,” Mr. Doctoroff said.
A commercial tenant is attractive to city officials because it provides an employment base that was a major justification for rezoning Hudson Yards, where the West Side rail yards are located, in 2005. A tenant will also help make the massive undertaking financially attractive to banks to finance.
The city will play less of a role in determining what happens with the West Side rail yards than it did with the Coliseum site, however. The city had veto power over that deal, but this time it has two votes on a panel that will select the winner. The M.T.A. has not said how large the panel will be, but the agency will have the majority of seats.
What’s more, the two parties have somewhat competing interests: The M.T.A. wants to maximize the revenue it receives (it wants to plug a billion-dollar hole in its capital plan); the city, meanwhile, has leaned in favor of open space, an amenable design and preserving the High Line, the abandoned elevated freight railroad that winds its way through the site.
Adding to the mix is the decision by the M.T.A. to eventually show the proposals to the public, as the agency did with the Coliseum bids. State Senator Tom Duane, who represents the area, said that he will be meeting with the M.T.A. in the next couple of weeks to determine the how and when. The entire selection process will likely run into early next year.
“I have great faith in the community around the rail yards, and that their involvement won’t make it more complicated than it is,” he said. “Remember, the West Side of Manhattan is used to large-scale development projects. It is a pretty sophisticated group of neighbors and activists.”
With additional reporting by John Koblin.
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