Staring across Manhattan’s last untamed strip, the rows of sleek silver commuter trains sliding along the island’s only active rail yard, the Related Companies’ Stephen Ross points to the future.
His finger moves faster, toward the eventual home of 6 million square feet of sparkling office space, divided between three towers; toward 5 million square feet of residential space, a mixture of affordable housing, luxury rentals and high-end condominiums; toward 1 million square feet of retail space, including a movie theater and a department store. He gestures at the future home of the hotel, the public school, the 14 acres of parks and open space. All on a 26-acre platform over a working rail hub. From scratch.
If he can pull this off (current estimate: Ten years and at least $12 billion), Hudson Yards will become the most significant private development project in Manhattan since John D Rockefeller Jr spent $250 million (more than $3 billion in today’s terms) to create the 22-acre Rockefeller Center in the 1930s, expanding and recentering America’s largest and densest city. “We are revitalising an area of our city that had long been underused,” says New York Mayor Michael Bloomberg. “When it’s complete, it will be one of New York City’s great neighbourhoods.”
In some ways, the stakes are even higher than that. Ross may own some 60 percent of Related, which currently owns and manages a property portfolio valued at $15 billion, but the Hudson Yards transcends money. Using every real estate trick he’s learned over his 71 years, Ross is trying to demonstrate that even in a hub of unions, regulation and bureaucracy, private developers can still accomplish grand things.
“When you look at the rail yards today you have to have vision,” he chuckles, watching the trains during a blustery Friday in February. “A lot of vision.”
And it got worse still. Goldman Sachs pulled out as a partner in early 2010 just as the MTA began hammering Related to sign the lease. As the World Trade Center redevelopment, funded by 9/11 insurance proceeds and government agencies, began rising downtown, timing seemed to doom Ross to the same fate as the other developers who had tried to improve the choice parcel over the past few decades.
Hudson Yards dwarfs the Time Warner Center—it will require four times the debt, and it doesn’t have the marquee anchor tenant in place. Related will ultimately put up 5 percent of the entire cost, or $600 million, supplemented by equity from Oxford Properties and eventually secondary investors. “It’s Time Warner on steroids,” says Ross.
(This story appears in the 30 March, 2012 issue of Forbes India. To visit our Archives, click here.)