On a recent evening at the 92nd Street Y, Stephen Ross, chairman of the Related Companies, reflected on four decades of transformation—for the city, where he has built more apartments than almost any other developer of his generation, and also for himself. In September, Mr. Ross, 72, stepped down as the CEO of the once-humble affordable housing outfit he transformed into a luxury real estate behemoth.

Not that he’s stepping aside. There he was a few weeks later, alongside Mayor Bloomberg and Council Speaker Christine Quinn on the formerly desolate Far West Side, breaking ground on the Hudson Yards project, a glass and steel city within a city that is actually larger, in terms of square footage, than downtown Portland or downtown Baltimore.

“What’s good for the city is the first thing,” Mr. Ross told the audience at the Y. “I think if you really take that into consideration, the opportunities open up.”

On stage, Mr. Ross wore a navy suit and pink tie and sat next to fellow real estate mogul William Mack of AREA Property Advisors, as Businessweek senior editor Diane Brady asked the two friends about their long careers. About a decade ago, Messrs. Ross and Mack teamed up to build the Time Warner Center, the twin-towered behemoth that rose on Columbus Circle in the wake of the Sept. 11, 2001 attacks, an unwitting glass echo of what had been lost. Before the project began to rise, doubts were widespread, but Mr. Ross recognized a unique combination of location, transportation and public support that has become the hallmark of his success.

Even before the attacks, the city had been “muddling along,” as Mr. Ross put it, but he could never forget gazing at the site, home to Robert Moses’s loathsome Coliseum, from his old office on the other side of the park, at 59th Street and Madison. The opportunity, with the park and subway, at the axis of Midtown and uptown, was undeniable. “The location was superb,” Mr. Ross said. “I looked at it as the best site in the city that had been undeveloped. I really thought it deserved a world-class project.”

From his revival of Union Square to his partnerships with Equinox and Danny Meyer, everything has been preparing Mr. Ross and the Related Companies for creating the 26-acre, $12 billion Hudson Yards, the city’s 21st-century Rockefeller Center. The best views, the best services, the best address. “Everyone sees the potential now,” Mr. Ross boasted at the Y.

Related’s rise has been entwined with the rebirth of New York from a bankrupt dystopia into a glittering place of wealth. The evolution has undeniably improved safety and heightened public investment, but it has also perpetuated a view, held by some New Yorkers, that the city is losing its character and diversity to a wave of glassy boxes. While no single developer is responsible for this gentrification, Related’s trophy towers have strongly correlated with the luxury surge.

And no developer has navigated City Hall with such success. Mr. Ross became friends with Dan Doctoroff, the former deputy mayor for economic development in the Bloomberg administration, when the two were part of a group that bought the New York Islanders in 1997. Critics argued that their relationship gave Related an inside track on development bids, but others credited the company’s appetite for complexity and a willingness to take on daunting projects.

“He understands what’s needed on the city’s side,” said Steve Spinola, president of the Real Estate Board of New York, where Mr. Ross was chairman for two years. “He’s in it for the long haul.”

SUCCESS has enriched Mr. Ross, whose net worth is an estimated $3.1 billion, according to Forbes. He owns the Miami Dolphins and though a registered Democrat, became a champion of Mitt Romney in the recent presidential campaign, donating over $100,000.

And yet Related originated from disappointment. After graduating from law school and working as a tax attorney in his native Michigan in the 1960s, Mr. Ross arrived in New York to work at the now-defunct investment bank Bear Stearns. “I was working for a Wall Street firm, and I got fired for the wrong reasons,” he said at the 92nd Street Y. “The person I was working for didn’t really realize my capabilities.”

But as Mr. Ross noted in a 2009 graduation address at Michigan University’s School of Business, which bears his name after a $100 million donation, “Bear Stearns is gone. Steve Ross is still here.”

Mr. Ross wanted his business to be sustainable, without relying on boom and bust cycles, so he focused on affordable rental housing. His first projects were small apartment complexes financed by the U.S. Department of Housing and Urban Development (HUD) in Wasaka, R.I., and Middletown, N.Y. He then closed in on New York, building in Rockland and Westchester Counties and southern Connecticut.

Mr. Ross eventually entered Manhattan with an affordable housing project in 1976, and his big break came when he won a bid in 1980 for River Walk, a development site just north of Manhattan’s Stuyvesant Town.

Related won the rights to build some 1,800 apartments, a hotel and ample retail (a formula the company would replicate again and again), but the biggest prize was having the Related name run on the front page of The New York Times. This immediately led to more deals, in Battery Park City and on the Upper East Side. And thus his conquest of Manhattan began. “It was first survival and concentrating on a company, then it was a question of diversifying,” Mr. Ross said. “I knew I didn’t want to stay in affordable housing forever.” 

In the early 1990s, Manhattan’s Union Square was nicknamed “Needle Park.” “It was really dangerous back then,” said Robert K. Futterman, chairman and CEO of Robert K. Futterman & Associates, a top retail brokerage that has worked with Related on numerous projects. “Though it was a great transportation hub, it didn’t have great retail.”

The district’s historic buildings had begun giving way to newcomers, starting with Zeckendorf Towers, built in 1987 after the demolition of the Union Square Hotel. But Mr. Ross first focused on old buildings, partnering with Starwood Hotels and Resorts to convert a historic Beaux Arts building on the northeastern side of the park into the W Hotel. Related also owns the historic building on the north side now occupied by the massive Barnes & Noble, one of the bookseller’s top outlets.

Related’s biggest mark was 1 Union Square South, completed in 1999, which sits at the terminus of Park Avenue South and looms over the park. “It was a very important site as a focal point,” Mr. Ross said. Related has been lauded for the aesthetics of some of its projects, but not this one. A blank wall spans an entire city block, and it isn’t helped by the swirling digital clock Related commissioned to liven up the façade.

“The south side of Union Square has been trashed, from an architectural point of view,” said Simeon Bankoff, executive director of the Historic Districts Council.

Aesthetic questions aside, the building has been a financial coup. Monthly apartment rents now go as high as $17,000, and dozens of condos have sprung up around the park in the past decade as a result. “It was really one of the first urban power centers,” said Mr. Futterman.

As 1 Union Square South was rising, Related was bidding for what would become the Time Warner Center.

For two decades, Mort Zuckerman’s Boston Properties had tried and failed to make something of Robert Moses’s unloved old Coliseum. When his deal fell apart, the Giuliani administration put it out to bid. Mr. Ross quickly mobilized. He would give Jazz at Lincoln Center a prime view overlooking Central Park and rope in Richard Parsons, the Time Warner CEO, as the anchor tenant in the office portion of the tower.

“He’d been in 75 Rock for 35 years with no issues,” Mr. Ross recalled, referring to Time Warner’s old headquarters at Rockefeller Center. “I told him, ‘This isn’t about space, this is about showcasing your company. Nobody knows who you are; they think you’re a part of NBC.’ That struck a nerve.”

He also lured the Mandarin Oriental hotel chain and a clutch of Fifth Avenue brands, like Hugo Boss and Cole Haan, for a “vertical mall” in the base of the tower. A popular model in Chicago, such retail spaces have always struggled in New York, where storefronts are believed to be king.

In the end, Related beat out the likes of Tishman Speyer, Bruce Ratner and Donald Trump. Though the development seemed expensive at the time, costing $410 million for the site and $1.7 billion to build, it has paid off handsomely. “We stole it,” said Mr. Ross.
“It’s become a destination point.” said Rosemary Scanlon, dean of New York University’s Schack Institute of Real Estate. “There’s a lot of vision there, as well as courage.”

Paul Goldberger initially panned the structure in The New Yorker, calling the towers “banal.” Nevertheless, he commends the developer for the architectural diversity of its portfolio. “I think Related has been very good at bringing a range of serious architecture ideas into the mainstream,” he said. “They know that the market today won’t accept junk.” 

HUDSON YARDS is its own city, and not a small one at that. The shortest towers will be 75 stories high, and designed by some of the world’s best architects. The tallest will surpass the Empire State Building, with a higher observation deck. Hudson Yards will have its own cultural center and a mall twice the size of Time Warner Center, and nearly half the 26-acre site spanning eight city blocks will be given over to public open space. It will be as if someone has taken a massive swath of Midtown, perfected it, and dropped it on top of the once-desolate Far West Side. And it will only cost $12 billion and a dozen years to build.

The project reflects Related’s growing influence in City Hall. Three years ago, in a rare defeat, Related’s plan to convert the Kingsbridge Armory in the Bronx into a massive shopping mall was rejected by the City Council because Mr. Ross refused to agree to require that retailers there pay a living wage. Mr. Ross walked rather than back down. This year, Hudson Yards was exempted from a citywide living wage bill, which some critics claim was the result of a $34,000 donation to Ms. Quinn’s mayoral war chest.

Already, the area is filling in around him, with luxury buildings popping up in the once-unthinkable wasteland of 10th and 11th Avenues in the 40s and 50s. “Already, we’re getting our best rents in Chelsea,” Mr. Ross said. For proof, look to the nearby MiMA tower, in which TIAA-CREF just paid $551 million for a 70 percent stake, and where the top floor units rent in the $10,000 to $25,000 range. The tower is almost fully leased. It has a doggie spa, and it is at 42nd and 10th.

The case could of course be made that by burnishing all these outlying areas, Mr. Ross is leaving the city overpolished. Not only has he shifted from affordable to luxury housing, he’s fighting living wages for the working class while creating apartments that sell on average for more than a million dollars, and frequently tens of millions. If any developer represents the go-go highs of the Bloomberg era, it is Stephen Ross, even if his approach often leaves the average New Yorker on the sidelines, gazing up at glass peaks.

In 2017, Related plans to move its corporate headquarters from the Time Warner Center to Hudson Yards. And Mr. Ross will trade his Time Warner penthouse, with its Central Park view, for a fresh perspective atop what he calls the new heart of New York.

editorial@observer.com

Disconcertingly disconnected. Click to zoom in for a better view. (Bing Maps)

A reader sends along this thoughtful critique of the problems inherent in the latest plans for Willets Point:

What a horrible idea. A parking lot and a mall? That neighborhood is a mess already, though. Just a few hundred feet from the bay in one direction and Flushing Meadows in the other, and they're both nearly impossible to access. It should be a wonderful spot to hang out before a ballgame, and instead it's just a tangle of highways. Thank you, Robert Moses.

It's a very interesting point, and perhaps points to a better way forward for this forlorn corner of the city.

After all, just look at this picture. A giant parking lot on one side, a giant (though very vibrant) pit on the other. All of it surrounded by a mess of highways, just beyond, lush lawns and open water. Indeed, this was the fine work of Robert Moses, master of the World('s Fair), so it makes sense that roads are bisecting and bifurcating everything, keeping the various masses, washed and unwashed, from crossing paths.

But this has been less the prerogative of this mayor, thankfully, which is why the decision to go all cars-n-malls—yes, even in Queens—makes so little sense. This is still a dense area, one well-served by mass-transit, one begging for improvement. The proposal for two huge malls actually makes the original plan conceived by the mayor five years ago, to build an actual neighborhood here, look even more impressive than it already did. Something new, with plenty of jobs and affordable housing, maybe even a convention center.

Now, instead, Queens is getting more suburban development, when it deserves better. As our reader points out, wouldn't it be nice to extend the park all the way up, doubling it in size? Here is a place where capping some railyards would make sense—push the development to the edges, and open up the rest. Madison Square Garden has no parking, and it gets along fine.

There is the added advantage that the expense of remediation and infrastructure to build up Willets Point to where it needs to be—it's seven feet below the flood plane in some places—would be considerably cheaper were it to be turned into a park rather than streets and homes and shopping malls. Instead, we sell it off to the highest bidder, and do their bidding at that, so that the development might commence cost-free. We already know that is how the administration likes to do business.

Which is not all bad. Times are tough, money is tight, would anything really happen without some private help? Probably not. No plans have yet been unveiled, so it remains to early to judge, but for the city's sake, whatever gets built here, may it be as innovative and ambitious as what came before.

mchaban [at] observer.com | @MC_NYC

The Commercial Observer: What's the latest on the West Side Yard project?

Mr. Blau: The timing's perfect for that question. We last week signed a contract with the M.T.A., which is the first step in the process. That contract was changed a little bit and provided some triggers as to when we would have to close with the M.T.A., but in the meantime, it allows us to really get started working on the development and talking to potential tenants coming to the project. So we signed the contract and we formed a new joint venture with OMERS, which is the Ontario Municipal Employees Retirement System, through their affiliate, called the Oxford Properties Group. So together we will be the joint venture partners and developers of the entire project.

When do you expect to begin construction?

That's the big question. Obviously the markets have just gone through a pretty significant shock and nobody has a crystal ball to know exactly when to start, but we are seeing tremendous interest from large office users and retailers for state-of-the-art, green, high-tech, built-to-suit space. Although the vacancy rate might be higher than historical norms, if you look at spaces available for large tenants that have all the modern amenities and green requirements, there's not that many options.

In general, it looks like Related has grown fairly confident with the idea of beginning new development projects. Why is that, especially right now?

We have a lot going on, but we have not started a lot of new things in the past 12 months. We are now opportunistically looking at land and development sites and starting to think about the future, but I don't think the market is quite ready, this year, for new construction starts. I also don't think the construction lending markets are buying debt. But we're starting to see a glimmer of light, and market dynamics are starting to head back to equilibrium and we're hopeful that in the near future we will be able to start again.

We last week signed a contract with the M.T.A., which is the first step in the process. It allows us to really get started working on the development and talking to potential tenants coming to the project.

Between commercial and residential, which is a safer investment right now?

In New York we've always been firm believers in the residential space, so that's where our focus is. We have done built-to-suits for large office users. So, again, to the extent that you can deliver a product that doesn't exist in the market, we like built-to-suit. But beyond that, we really focus on residential.

Related just opened a few new offices, including outposts in Abu Dhabi and Shanghai. What's your outlook for the Middle East?

When the market really turned down here, we had all this real estate talent and expertise and resources here, and we were looking to keep the team together and active and see where we could utilize those resources. We looked outside the United States to other places that were still growing, and that's what led us to the Middle East and China. We have two of the sovereigns from the Middle East-Kuwait and Abu Dhabi-as partners in our company, and they helped us find partners from the Middle East, and we're working with them now for venture development. It's a way to really expand our capabilities when development has slowed here in the states.

Are there any cultural challenges that come with expanding to the Middle East or China?

I mean, in China, not everyone speaks English. In the Middle East, it's a little bit easier because everybody does. But obviously the development has to reflect local traditions and customs, and it's very important for the most part that you have local partners when you're doing development in countries like that so you don't make a mistake. There are certain cultural traditions and elements that are required in those areas.

Outside of the Related Company, you and your partners-Stephen Ross and Bruce Beal Jr.-have plans to acquire a commercial banking institution from the F.D.I.C. Can you share some of the details?

When the markets were down and we knew that development wasn't going to be so busy, we really saw the opportunity to move into different areas where we could capitalize on our real estate expertise but not directly into development, for that period of time. We set up a series of funds and really created a fund management platform here. So we created a core asset fund and a construction loan fund and really where we saw one additional opportunity was to be a lender as opposed to just being involved on the equity side of real estate. And the best way to capitalize in the lending business is through costs of deposits, so we started investigating the possibility of purchasing an F.D.I.C.-insured depository bank in the United States, and we spent the past two years getting ourselves through the regulatory process to get approved and now, today, we have our charter and F.D.I.C. insurance. Right now, we're really looking to work with the F.D.I.C. to acquire an institution.

Skechers recently leased some space at the long-awaited Gateway Center in the South Bronx. How is business going there? Is it nearly leased up?

I couldn't tell you the exact percentage, but I think we're about 92 percent leased right now, and the stores are having phenomenal success in their sales. So we consider that a tremendous success in this market. The balance of the space will be leased over time as more retailers learn about us and the existing retailers talk about the success they're having in sales.

On a lighter note, any good plans for the summer, or just busy working?

We're busy working.

jsederstrom@observer.com