Still, it would push the question of when-or if-the West Side rail yards will actually be developed to an uncertain point in the future, welding the M.T.A.’s ability to make money on the property to a set of economic indicators.
In a joint statement, M.T.A. and the developer said they were finalizing the deal. “M.T.A. and Related are working diligently to finalize the transactional documents,” the statement said. “We look forward to completing the contract and moving into the next phase of this exciting development.”
The air above the West Side rail yards, two 13-acre squares between 10th and 12th avenues, have proved a glimmer in the eyes of planners for years. In the 1980s, the Reichmann real estate family and Gulf and Western had plans to move Madison Square Garden and develop the area, a dream that later fizzled as the Garden decided to stay put.
The current vision is an outgrowth of the Bloomberg administration’s bid to host the 2012 Olympics, as the mayor fought to build a football stadium for the Jets on the West Side rail yards, a battle he lost nearly five years ago. When that failed, the city pushed for a mixed-use development scheme for the site, and with a rezoning approved by the City Council last month, the site can give rise to more than 6,000 apartments and 6 million square feet of commercial space in a larger far West Side redevelopment that’s been compared in scope and ambition to London’s Canary Wharf.
Related, which built the Time Warner Center and numerous luxury and below-market-rate residential buildings around the city, was conditionally designated to be the site’s developer in May 2008.
Since, Related, which is partners with Goldman Sachs on the project, has spent considerable money on the would-be development as the real estate market collapsed around it. Should it put down the deposit, the firm will have paid $60 million in costs to the M.T.A. and the city, on top of its private spending on the project.
Even if the economy improves and Related is obligated to start paying rent, it would need to find tenants willing to take a chance on a new part of town (33rd Street and 11th Avenue is hardly a prime location right now). The Bloomberg administration is paying $2 billion to extend the No. 7 line to the area, but, for now, there are not many office tenants on the market wanting big blocks of space anywhere, let alone a new building in an unproven area. Related has said it expects it would need at least one major anchor tenant for retail, hotel and office components in order for the firm to build a platform over half the rail yards, at a cost of up to $1 billion.
Times, of course, are different than they were back in 2007, when developers like the Durst Organization, Vornado Realty Trust, Tishman Speyer and Brookfield Properties lined up to bid on the yards. Back then, there were three major corporate tenants tentatively committed to put headquarters on the West Side, and a fourth that was very interested.
All three-News Corp., Morgan Stanley and Condé Nast-have since scaled back their ambitions or at least put them on hold. As for the fourth: It was Lehman Brothers.