How long will it take for Related to fully develop its Hudson Yards area?
Nearly two years ago to the day, Related Companies agreed to pay the MTA $1 billion for the rights to the Hudson Yards land. As the real estate market collapsed, though, the two sides delayed signing the deal as various benchmarks for payments were negotiated.
Today, the MTA and Related finally announced a contract for the rights. The deal calls for the MTA to lease the land to Related for 99 years with various purchase options, and in return, the MTA will earn $1 billion for capital programs. Related plans to build 12 million square feet of commercial and residential development.
“This is a tremendously exciting development project that together with the extension of the 7 line will turn this area into a vibrant residential and commercial neighborhood,” MTA Chairman and CEO Jay H. Walder said in a statement. “We were also able to maximize value for the MTA and provide a new revenue stream to support many of our vital capital projects.”
Although Related will now put $21.75 million down as a deposit with two more payments of around $11 million due in November and next May, the deal won’t close until the economy hits various benchmarks. Related will now begin searching for tenants willing to commit to office space that won’t be ready for years, and the company will have to build a deck over the LIRR rail yards without disrupting service.
In related Related news, the real estate company also unveiled a new funding partner. After dropping Goldman Sachs earlier this year, Related will team up with the Ontario Municipal Employees Retirement System, a Canadian pension fund. The fund will provide Related with, according to The Wall Street Journal, “up to $475 million in equity.” With this infusion of capital, Related now believes work on the Hudson Yards “will be under way before the triggers are hit.” The 7 line extension, which will open well before the development takes off, will help spur this development. Now, let’s see the MTA and New York City find the money for the stop at 41st St. and 10th Ave.