Extell Moves To Get a Piece of a Hotspot in the Making

Real Estate

By ELIOT BROWN, Special to the Sun
May 25, 2007

With a vision for the Hudson rail yards slowly taking shape, a top developer has plans to build a 600,000-square-foot mixed-use tower across the street, marking an early entry into the hotspot-to-be of Midtown West.

The Port Authority yesterday approved the sale of a 7,300-square-foot sliver of land to Extell Development for $17.1 million, moving the giant developer a step closer to construction on the site, which sits between 30th and 31st streets east of 10th Avenue.

A spokesman for Extell said the company is likely to soon begin construction work for the building, which will contain residential and commercial space and a hotel. Within the land transfer, Extell left a provision for a skyway that would run across the street to the High Line, the planned park to be built on elevated rail tracks.

The building would be one of the few early arrivals to the gradually transforming Hudson Yards district that runs on the West Side between about 28th and 42nd streets, an area that was rezoned to encourage new, denser development in 2004. Anchored by such city- and state-led projects as the planned development of an expanded Javits Center, a new train terminal by Pennsylvania Station, and the Hudson rail yards complex, the area promises to be almost unrecognizable in 15 years, and developers are slowly buying up land.

For Extell and the other few early developers that trickle in, real estate experts say being the first to build can be costly.

"The first project that goes up always takes a hit because you're taking the most risks — you have unestablished market rents," an analyst at Real Capital Analytics, Daniel Fasulo, said. "There's a lot of major developers acquiring land there right now, but it's basically a game of chicken between your neighbors."

Extell is said to be one of five firms planning a bid for development of the rail yards, which run between Tenth and Twelfth avenues. The city and state foresee a giant complex of residential and commercial towers atop the yards, with a spacious park running east to west envisioned for the center of the development.

The state, which owns the site, intends to issue a request for proposals in coming weeks for the development. The bid to complete the complex could go to a single or a team of developers, officials have said. They would be required to build an extremely costly platform over the rail yards before constructing the towers.