successfully bid last May on development rights for the Metropolitan Transportation Authority's Hudson Yards, has reached an agreement with the MTA to postpone closing on the massive project, according to published reports. The agreement, which must be approved by the boards of both Related and the MTA, reportedly would delay the closing for one year. MTA and Related did not respond to GlobeSt.com inquiries by deadline.
The New York Times quoted Related chairman Stephen Ross as saying the new agreement was necessary due to the recession and lack of credit. "I'm excited about the future of New York," Ross told the Times. "I believe it'll come back even stronger than before. But right now we're going through a financial crisis."
After the deadline for closing on the deal was extended by 90 days last November, Related and the MTA continued negotiating through a Jan. 31 deadline, according to published reports. The postponement reportedly agreed to by the two sides comes as MTA seeks to close a budget gap of more than $1 billion and avoid what MTA executive Elliot Sander has called "draconian" fare hikes and service cuts.
When the deal to develop the space above the MTA's 26-acre West Side rail yards was announced last May, Related and its partner Goldman Sachs planned a total of 12.1 million square feet of office, residential, retail, hotel and open public space. The winning bid by Related and Goldman was slightly more than $1 billion, of which $50 million would have been due at closing.
In order to proceed with the project, Related would first have to build a platform over the existing yards, which are in daily use by MTA's Long Island Rail Road. Cost estimates on constructing the platform have ranged up to $2 billion.
The Hudson Yards postponement, which GlobeSt.com will report in greater detail as information becomes available, is the latest of several sizeable projects--locally and nationally--to hit the pause button recently as financing becomes scarce. Last week, GlobeSt.com reported that Boston Properties had put its proposed office tower at 740 Eighth Ave. on hold, a day after Revel Entertainment partially shut down construction on its $2-billion casino in Atlantic City. In December, Vornado Realty Trust scrapped plans to build a 630,000-square-foot office building in Harlem. "The economics are not warranted today to do that job," Vornado CFO Joseph Macnow told an investor conference.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
