Tishman Speyer’s Hudson Yards plan, minus some office space, gets the nod

Mar.March 26, 2008 05:07 PM

Gov. David Paterson and Mayor Michael Bloomberg hailed Tishman Speyer’s plan for developing the MTA’s 26-acre Hudson Yards as the Rockefeller Center of the West Side at a press conference that announced the winning bidder today.

Tishman Speyer happens to own Rockefeller Center, a fact that was probably not lost on the MTA as it considered which of five developers could pull off one of the city’s biggest developments ever.

Paterson, during his remarks, confirmed that Tishman has cut its planned office space from 10 million to 8 million square feet. In total, the project will create 12 million square feet of office, residential, retail and community space.

Rob Speyer, Tishman Speyer’s president, said the firm’s office-heavy plan still makes sense as the economy sputters, because of pent-up demand for office space in the city.

“Demand for office space is truly what is driving this project,” Speyer said. “There’s so much demand that New York has been able to support speculative construction.”  

The reduction in office space could help the plan gain approval from the local community board, whose members had called for more residential space.

Tishman, which bid $1.004 billion for the site, was selected despite its lack of an anchor tenant. Morgan Stanley withdrew its interest in being an anchor tenant over fears that a new headquarters would not be ready by the time it needed it.

Speyer said the firm would be flexible with its plan, including with the amount of affordable housing. Tishman’s plan for 379 of affordable housing, the lowest among the five bidders, has been criticized by housing advocates. 

“We’re going to keep an open mind and think about good ideas that come up,” Speyer said.

Tishman’s plan calls for about 3,200 residential units and 500,000 square feet of retail.

City and state officials dismissed fears that the weakening economy could delay the project’s completion, as happened to Bruce Ratner’s Atlantic Yards mega-project in Brooklyn, and said it would only boost the economy.

Bloomberg made the optimistic point that falling construction costs brought on by a slowing economy could help the project avoid going over budget. Speyer said construction could likely begin in 2010 with occupancy of some buildings by 2014, when market conditions could be entirely different from today. The plan must be approved by the city and the 26-acre area must be rezoned.

Officials said the project created more incentive for the MTA to complete the 1.5-mile No. 7 line extension to connect the rail yards with Times Square. Bloomberg said the city had already raised the $2 billion for the extension.  

Tishman, which won the rights to a 99-year lease, will have to pay additional cost of building a platform over active train tracks, now expected to cost $2 billion.

The only other bid still in the running this week, the Durst Organization-Vornado Realty Trust joint venture, had Conde Nast Publications as an anchor tenant and proposed 6.4 million square feet of residential space, the most of all five bids.

Tishman bid $112 million more than Durst-Vornado. On Sunday night, Durst-Vornado came up $38 million short in a last-ditch effort to overtake Tishman’s bid.

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