Eliot Spitzer and the Related Companies are joining forces to build a 1.4 million-square-foot apartment-and-office development on a pair of adjacent sites they own in Hudson Yards, The Real Deal has learned.
The partnership doesn’t simply place the former governor and top executives from Related back at the negotiating table – Spitzer’s administration in Albany worked with the firm and Vornado Realty Trust a decade ago on the Moynihan Station project – it also helps them potentially front-load the development’s residential portion at a time when there’s still heaps of competition for office tenants on the Far West Side.
Representatives for Spitzer declined to comment on the partnership, while Related did not immediately return a request for comment.
Related signed a contract in September 2013 to buy its site at 517 West 34th Street for an undisclosed price, while Spitzer paid $123 million to assemble his site next door, records show.
The partners have asked the city for permission to split the project into two phases. In addition, they’re asking the city for special permission to build all 341,000-square-feet of residential space in the first phase. Under existing zoning conditions, they would only be able to build up to 100,000 square feet of residential space in the first phase.
Phase one would start with what the developers are calling the “Tenth Avenue Parcel” between West 35th and West 36th Streets, where they wish to build a 415,000-square foot, mixed-use building with 400 apartments set atop nearly 75,000 square feet of office and retail space.
Phase two, which would rise directly next door on the “Hudson Boulevard Parcel,” would see the construction of a roughly 950,000-square-foot office tower overlooking Hudson Boulevard Park.
Their proposed development sits in an area of the Far West Side that the city rezoned in 2005 when it paved the way for Related’s Hudson Yards megaproject, which is now rising a few blocks south over the Metropolitan Transportation Authority’s rail yards.
City planners zoned the blocks north of 34th Street where the Spitzer and Related properties sit to encourage developers to build large, mixed-use projects. But the city officials wanted to keep an emphasis on commercial use in that stretch of the Far West Side, so they included a stipulation that a developer could only build residential units once all of the floor-to-area ratio designated for commercial space on a site was exhausted.
But the city left open a back door in case the market became oversaturated with office space. It allowed developers with large sites – those with a lot area of at least 69,000 square feet – to build their residential portions first, so long as the final project met the required ratio for residential-to-commercial square footage.
Spitzer and Related’s combined sites, however, don’t meet the mark. The sites combine for a lot area of just 56,793 square feet. Under the current zoning rules for lots that size, even if the developers phased their projects they would have to stick to the site’s residential-to-commercial ratio. Under that guideline, their 415,000-square-foot building would be allowed to have only about 100,000 square feet of residential in phase one, not the full 341,000 square feet they’re asking the city to green-light.
In their application to the city, Related argued that there’s already a “substantial” amount of commercial development underway or planned in the Hudson Yards district, and they wanted the “flexibility” to meet the demand for residential housing first.
Spitzer and Related aren’t the only developers who would rather focus on residential use in the Far West Side.
Silverstein Properties is considering splitting its 1.6 million-square-foot development site several blocks north at 11th Avenue between West 40th and 41st streets into residential and commercial phases. Under that proposal, the residential component would be built first. That site, however, lies outside the Hudson Yards district and is subject to its own unique zoning conditions.
Related has seen success with its big bet on Hudson Yards – the developer just landed money manager BlackRock as an anchor tenant to its fourth and final office tower there – but there’s still plenty of competition.