MTA huddles while Tishman Speyer bid gains steam

Mar.March 24, 2008 03:03 PM

While the Metropolitan Transportation Authority board’s Finance Committee meets in a closed session today, talk swirls around the possibility of Tishman Speyer being named as the winning bidder to redevelop Hudson Yards by Wednesday, and a source says Tishman executives are “cranking out” the final details of a deal.

“Tishman Speyer is definitely in the lead,” said another source, who is close to the negotiations and asked for anonymity. The source added that the Durst-Vornado team remained in conversation with MTA executives about its bid, but said “the MTA is looking to close a deal with Tishman Speyer.”

The Tishman bid had been overshadowed by others. But the MTA may well be betting that Tishman Speyer, despite reports that co-bidder Morgan Stanley is no longer interested in being an anchor tenant, has the track record to pull off such a huge development. Tishman owns Rockefeller Center and built Berlin’s Sony Center, among other trophy properties in the United States and Europe, and has weathered past periods of economic uncertainty to build value over decades. 

“This is not a [short-term] money play,” for a developer that wants to cash out quickly, said a real estate veteran who asked for anonymity to avoid alienating other bidders. “This is a play for people who have a vision and track record of building and creating things with vision.”

The MTA wanted to sell (and later decided to lease) the acres over its West Side rail yard to raise cash for the Second Avenue subway and other key transit improvements, despite looming deficits. Last fall, when five bidders revealed plans for transforming the Hudson Yards site, Tishman’s got a bit lost in others’ glare. The Related Companies and a joint venture from the Durst Organization and Vornado Realty Trust, with big media companies as anchor tenants and snazzy green technology, got the early front-runner honors. But insiders insisted that anything could happen, and that development teams would try to cut deals before the project ever reached completion. 

The Tishman plan’s urban design draws inspiration from European cities: a “forum” like the Berlin Sony Center’s and a grand staircase that COO Rob Speyer terms “our Spanish Steps.” Just two senior architects, Helmut Jahn and Peter Walker, are working on the project, unlike other bids that risked clashing egos with several design firms on board. And the plan’s dominant feature — 10 million square feet of office space for financial companies — could still lead to higher-priced commercial space than other media-dependent bids, despite recent trouble in the financial service sector.

While Related and Durst-Vornado both proposed the latest energy-efficient technologies, Tishman simply aims for a Leadership in Energy and Environmental Design (LEED) gold certification from the U.S. Green Building Council.

Affordable housing could be one of the stickier issues in Hudson Yards’ development, so a winning bid by Tishman could open doors for side deals with Durst-Vornado, which proposed 7,000 housing units (compared to 3,000 for Tishman) and hasn’t entirely been ruled out of the running, sources say.

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