Far West Rising

Just north of the Hudson Yards project, a new neighborhood is sprouting with nearly 12 million square feet of development underway

May.May 01, 2016 01:46 PM
Hudson Yards rendering (Image courtesy of Cityrealty)

Hudson Yards rendering (Image courtesy of Cityrealty)

When the city rezoned the Far West Side in 2005, it wasn’t just to get mega projects — like the Related CompaniesHudson Yards and Brookfield Office Properties’ Manhattan West — built.

The idea was to spur development in a 48 block-wide swath west of Eighth Avenue. And it worked like a charm.

This month, The Real Deal zeroed in on the area that’s buzzing with the most activity within that zone — the hub from 34th to 42nd streets concentrated between 10th and 11th avenues, which currently has 11.8 million square feet of new construction either underway or in the planning stages. The vast majority of the area is zoned for commercial development. But the city also carved out a small segment for residential development near Hell’s Kitchen to act as a transition between neighborhoods. TF Cornerstone pioneered the first new residential project there when it completed a pair of rental towers with 835 units back in 2009. To be sure, the development of some of these projects may be slowed by external factors, such as market jitters and concerns over the sunsetting of the 421a tax abatement. But as additional projects and resources pour in, the neighborhood is only likely to attract more development going forward, sources said. On the resource front, for example, the Metropolitan Transportation Authority recently resurrected plans to build a subway station at 41st Street and 10th Avenue for the extended No. 7 subway line.

Transportation aside, observers say that whether new towers get built in this cycle or in a future cycle, they will get built. 

“Is there enough depth in the market to fill up all these sites? In the short term, no one really knows,” said Savills Studley broker William Montana. “That being said, this area is becoming the new center of gravity in Manhattan. It’s not a question of if they will get fully tenanted. It’s only a question of when.”

Below is a look at some of the most notable projects in this Far West Side development haven.

66 Hudson Boulevard

66 Hudson Boulevard

1. 66 Hudson Boulevard

Tishman Speyer made a huge splash in February when it released renderings for its 2.9 million-square-foot, 65-story office tower designed by starchitect Bjarke Ingels, dubbed “The Spiral.”

The design features a continuous band of landscaped, outdoor terraces that wrap around the 1,005-foot-tall building.

The tower is by far the largest on the drawing board outside of the Hudson Yards site and Manhattan West.

Colliers International’s Robert Tunis, who’s represented the likes of Facebook and Google, said that for many tenants location and price are bigger priorities than the building’s architecture.

But for “statement tenants,” an avant garde design can be a huge draw.

“Tenants, in general, may not care,” he said. “But that particular tenant does care.”

Tishman Speyer, headed by CEO Rob Speyer, is currently handling leasing in-house. But sources say construction is unlikely to start until the firm finds a sizeable anchor tenant, one likely to take 800,000 to 1 million square feet.

The development giant acquired the site in 2014 when it purchased a handful of properties at the corner of 34th Street and 10th Avenue from Sherwood Equities and the Rosenthal family for a combined $438 million.

But the firm still had to deal with a pair of tenants who lived in a small walk-up on the rear corner of the site who refused to leave. Notorious tenant lawyer David Rozenholc negotiated a $25 million buyout for the two, clearing a path for the developer to move forward.

The company estimates the all-in price of the project to be $3.2 billion, according to documents filed with the city in an application for property tax exemptions. A representative for Tishman declined to comment.

2. 451 Tenth Avenue

Former Governor Eliot Spitzer’s Far West Side project is getting closer to reality.

He’s assembled a site that could accommodate roughly 830,000 square feet.

Spitzer declined to comment, but during an interview last year on the Stoler Report, he said he was still deciding whether the majority of his project’s commercial space would be developed as office or hotel. “I’m not sure that you necessarily want to compete with a Brookfield, a Tishman Speyer and a Related in terms of getting your commercial tenants,” he said. “You know, I’m not anywhere close to their size.”

Eliot Spitzer

Eliot Spitzer

Sources told TRD, however, that he has since scrapped plans for a hotel.

Spitzer has been plotting his move for a while. Back in December 2013, he bought a trio of properties running through 35th to 36th streets near 10th Avenue for $88 million. Then, in 2014, he snagged a 41 percent stake in the adjacent corner property for $35 million from developer Jorge Madruga of Maddd Equities.

Madruga controls the property through 2113 under a 99-year lease. It’s unclear whether he’s going to build one large project or two smaller buildings.

Spitzer filed paperwork with the city a year ago indicating plans for an approximately 415,000-square-foot, mixed-use building with Class A office and residential on the corner part of the site. City zoning laws require the former governor to use about 100,000 square feet of that for residential.

Savills’ Montana said Spitzer’s relatively smaller site — compared to the mega-towers to the south — could actually help distinguish his property. “It would be a smart move to develop a high-end boutique building in that area,” Montana said. “Only certain-sized companies will require the big floor plates [in the larger towers]. There are smaller companies that are going to want to be in the orbit of these really large companies, and they will pay up to do so.”

3. 3 Hudson Boulevard

Across the park from Tishman’s site at 34th Street and 11th Avenue, the Moinian Group is planning a 1.8-million-square-foot, mixed-use tower designed by FXFowle. The exact plans for the tower, however, are still up in the air.

Moinian’s original plans called for retail and office on the bottom and left open the possibility to build residential condos at the top — on the 49th through 63rd floors.  But the developer is still looking for an office anchor tenant to take as much as 500,000 square feet.

Avison Young’s Arthur Mirante, who is leading the leasing effort, told TRD he’s telling prospective tenants that if they don’t want residential in the building, it will all be used for office.

3 Hudson Boulevard

3 Hudson Boulevard

Mirante noted that the Related is already constructing its newest (and northernmost) office tower at its Hudson Yards site — 55 Hudson Yards. That, he said, serves Moinian’s project well.

“You can kind of take a step back and see the neighborhood moving north to our site,” he said.

Moinian bought the site on 34th Street at 11th Avenue in 2006 for $54.8 million and expects the all-in development cost to be $1.6 billion, according to documents filed with the city in an application for property tax exemptions. The tower will feature a pair of six-story LED signs, which will either feature the address of the building or tenants’ names, said Mirante.

“One will actually look south down the High Line, so as people are walking up the park they’ll be able to see those screens,” he said. If the entire building is constructed as office, the floorplates will vary from about 48,000 square feet on the lower levels, where asking rents start at $90 per square foot, to about 17,000 square feet on the “executive” 49th through 63rd floors, according to the project’s website.

4. 537-545 West 37th Street, 540-548 West 38th Street

The Chetrit Group — which is scratching plans for its $1.8 billion condo conversion of the Sony Building — filed paperwork early last year indicating plans to build an apartment building and hotel on this site.

The firm had been shopping the site for sale, but in February it took the properties off the market and nailed down a $60 million loan there.

Its plans now call for a combined 373,000 square feet of development at a residential building on the 37th Street side of the site and a hotel on the opposite end, according to paperwork filed with the city.

The company did not return calls for comment.

hudson-yards-map5. 434-444 11th Avenue

Tishman Speyer apparently has the Far West Side development bug. In early March, the month after releasing renderings for the Spiral, it wrapped up another assemblage, where it’s now planning a 1.3-million-square-foot office tower.

The company bought a zigzag-shaped parcel from the Imperatore family for $163.5 million, according to property records. It also snapped up a small parcel on West 38th Street from the New Jersey-based Chiaia family for $44 million, records show.

The site only fronts about half of the block along 11th Avenue. Sources say Tishman Speyer will most likely wait until it’s made significant progress at its other Hudson Yards tower before it turns its attention to this one.

6. 515 West 36th Street

Lalezarian Properties plans to build a 38-story, 250-unit apartment building on this block-through site that will front along a new park known as “Hudson Park and Boulevard” that will run north-to-south between 10th and 11th avenues.

The Nassau County-based family firm, headed by Kevin Lalezarian, assembled the site in 2012 and 2013 at a cost of $46.7 million. Details are scarce, but the 390,000-square-foot building will include 200 market-rate apartments and 50 affordable units, along with some office and retail space. Lalezarian is particularly active on the Far West Side. It’s currently constructing three rental buildings in West Chelsea along the High Line. All told, they will house 374 apartments. And in August, the firm made a risky bet when it paid $1,200 per square foot to buy a $36 million development site on 30th Street west of 11th Avenue. The site, which overlooks the final stretch of the High Line, is zoned for manufacturing.

7. 514 11th Avenue

Back in 2014, Silverstein Properties filed paperwork indicating plans to develop a 1,400-unit, 1,100-foot-tall apartment tower at this 11th Avenue spot.

But today, details on the project are scarce. In addition, Crain’s reported late last year that Silverstein was looking to sell the site, citing disagreements with the city.

514 11th Avenue

514 11th Avenue

The former Mercedes-Benz dealership site, which Silverstein bought for $115 million, sits in the part of the neighborhood zoned primarily for commercial use, and the developer wanted to build a residential tower. Silverstein denied that the affordable housing talks were a deal-breaker but confirmed he was fielding offers for the site.

“We’ve got about $10 billion worth of construction underway and it’s too much. So I said if you get a good price for it, sell it,” he told the New York Post. “And if you can’t, put it on the shelf and wait until we finish what else we are doing.”

8. 450 11th Avenue

Flushing-based developer David Marx is bringing a 440-room Aloft hotel to the neighborhood.

The 42-story project — set to break ground later this year — will rise directly across the street from the Jacob K. Javits Convention Center, which Governor Andrew Cuomo has pledged to expand by 1 million square feet at a cost of $1 billion.

“I don’t think you can replicate this site anywhere else today,” Marx said. “If you were a tourist coming to the auto show and you have a 440-room Aloft directly across the street from the Javits Center, wouldn’t you want to stay directly across the street?”

David Marxx

David Marxx

Marx said he’s not concerned that certain parts of the hotel market saw softening last year.  “Tishman Speyer is building an office building right next door,” he added. “That alone will be able to keep this hotel full.”

The most recent renderings for the 263,000-square-foot project, which is scheduled for completion in 2019, show a pair of glassy rectangles stacked on top of each  other with about 3,000 square feet of retail at the base. The project is a long time coming.  In 2007, Marx paid $47 million for the development site at the corner of 37th Street and 11th Avenue, but Lehman Brothers reportedly took control of it in 2011 after he defaulted on his acquisition loan.

Then in 2013, the developer shelled out another $35 million to buy back the site.Marx is currently digging out a foundation for another hotel project in the neighborhood: a 399-room Marriott Courtyard at the northeast corner of 34th Street and 10th Avenue.

9. 462-470 11th Avenue

Kuafu Properties and Siras Development have been in court for months trying to gain control of this glitzy development project, known as Hudson Rise. Until that nasty legal battle is resolved, this 47-story tower — which is set to include 240 hotel rooms, 47 condos and 108 condo-hotel rooms topped by an internationally themed Shanghai Club — is not likely to see any progress.

The partnership soured shortly after the two teamed up to buy the site at the corner of 38th Street for $115 million in the summer of 2014. The following February, Kuafu filed a petition to dissolve the partnership, citing a deadlock with “no hope for reconciliation.”

Siras filed a lawsuit claiming its partner schemed to boot the company from the project for months, and Kuafu counterclaimed, accusing Siras of treating it as “dumb money.”

Representatives for both firms declined to comment.

A rendering of Hudson Rise

A rendering of Hudson Rise

Dennis Russo, chairman of the real estate group at the law firm Baker Hostetler, said bitter legal battles like this one could take time to resolve.

“It could literally take years. A case such as this could drag out three years, four years,” he said. “And it could seriously damage the project itself.”

Sean Ludwick of BlackHouse Development also filed a lawsuit against his former partners at Siras, accusing them of cutting him out of the development deals. Ludwick is now in jail for allegedly trying to flee the country to avoid manslaughter charges after crashing his car and killing his passenger, Douglas Elliman broker Paul Hansen, while allegedly driving drunk in the Hamptons last summer.

10. 509 West 38th Street

Construction is well underway on this 30-story, 225-unit rental building being developed by Imperial Companies. The firm — a partnership between former Vornado Realty Trust CEO Michael Fascitelli and Eric Birnbaum — is expecting construction to wrap up by the end of the year and to start leasing in early 2017. “There’s sort of a dearth of rental product,” Birnbaum said.

“It’s really just going to be us and Extell [in terms of new construction] in our little neck of the woods,” he added, referring to Extell’s nearly rental tower at 555 Tenth Ave. Birnbaum declined to reveal pricing on the BKSK Architects-designed building but said the company would reveal those details soon.

11. 555 West 38th Street

Rockrose Development is looking to erect a 1.4-million-square-foot, mixed-use tower on 11th Avenue across from the northern end of the Javits Center.

The site, which is primarily used now as a parking lot for Verizon, is one of two that the Elghanayan family assembled over years in the immediate area. (The other is home to the 835-unit rental towers at 505 West 37th Street built by TF Cornerstone, which split off from Rockrose in 2009.)

Rockrose President Justin Elghanayan said the company — which is required to use nearly 975,000 square feet of the building for commercial space — is still deciding whether to create an office or hotel project.

12. 555 Tenth Avenue

Extell Development is planning to launch leasing this summer on the neighborhood’s newest apartment tower, with the first tenants slated to move in during the fall.

Extell Development’s 555 Tenth Avenue

555 Tenth Avenue

But Extell’s founder Gary Barnett is no stranger to the area.

In 2007, he completed the 551-unit condo the Orion about a block east on 42nd Street. And he owns a development site on West 37th Street with about 120,000 buildable square feet that he picked up for $15.1 million in 2011.

Covering a full blockfront on 10th Avenue between 40th and 41st streets, his newest building, which was designed by SLCE Architects and will rise 52 stories, will add 598 new rentals to the area.

Barnett — who leased the land from the estate of real estate tycoon Sol Goldman — bought 140,000 square feet of air rights from the Church of Saints Cyril & Methodius and Saint Raphael next door for $16.5 million.

The developer pegged the total project cost at $455 million when it sought EB-5 investments for the development in 2014.

Gary Malin of Citi Habitats, which recently leased up ELK Investors’ 87-unit rental building nearby in Hell’s Kitchen, said the issue with both Imperial’s 509 West 38th St. and Extell’s project is absorption once leasing starts.

“I do think the market sees a slight pause in absorption with all the product coming online,” said Malin, whose firm is not working on either project. “How fast any of these buildings absorb depends on how aggressive they’re going to be with concessions.”

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