Next month will begin a new era of construction in Manhattan. Related Companies plans to break ground on the first tower of Hudson Yards, having secured a group of financial backers. The Journal reports that Bank of America "tentatively committed" to financing a $400 million loan for the 46-story building, and "a Middle East wealth fund" is also investing with Related. The loan is just a drop in the bucket for the $6 billion first phase, but Related's talks with partners are "far enough advanced," and should be finalized by year's end, that the developer feels comfortable starting construction. This may be a clear sign that the U.S. commercial development market is coming back to life, as Hudson Yards is the largest privately funded office project in the nation since the 2008 downturn.
In other Hudson Yards news, the Post reports that MTA Chairman Joseph Lhota says that Related is trying to change the terms of its deal with the MTA. Lhota would not specify, and a rep for Related denied the claims. The existing deal for a 99-year lease hasn't yet been finalized, and Related can't actually begin construction until it's signed. Given Related's confidence in starting construction next month, the developer must be pretty sure that the deal will be finalized soon.
The second and third phases of Hudson Yards are likely to see more complications. Each requires building a $800 million platform over the railyards, and construction costs could easily grow or the project could be set back by the economy. Plus, Related needs to secure a large tenant before embarking on the second phase. Last year, it was annouced that Coach will be taking 750,000-square-feet in the first 1.7 million square foot tower.
· Manhattan Megaproject Set to Rise [WSJ]
· MTA: Related Eyes Hudson Deal Tweak [NYP]
· Hudson Yards coverage [Curbed]