Goldman Sachs in $1bn NYC JV

The investment bank’s real estate arm and New York developer Related Companies sign a deal to transform the largest undeveloped plot of land in Manhattan. The deal was signed just six days after real estate investment firm Tishman Speyer pulled out of the project.

Goldman Sachs real estate arm, Goldman Sachs Real Estate Principal Investments, and New York developer, Related Companies, will acquire the 26-acre Hudson Yards site in Manhattan’s far West Side in a $1 billion deal.

The real estate arm of Goldman Sachs and Related announced late yesterday it would take over the project just six days after it was revealed a previous agreement with real estate investment firm Tishman Speyer had failed. At the time it was reported Tishman Speyer had sought to delay the redevelopment plans over zoning issues.

New York Governor David Paterson, New York City Mayor Michael Bloomberg and MTA executive director Elliot Sander said in a statement they had conditionally selected the Goldman Sachs/Related joint venture to develop the site – which sits on top of an active rail yard – and would seek full authorization for the deal at a special meeting on Thursday.

The joint venture would see Goldman Sachs and Related pay New York’s Metropolitan Transportation Authority, the owner of the site, $1 billion for a 99-year lease. It plans to construct 13 buildings on the site, including offices, apartments, hotels, shops, parking space and public spaces. The building space would total 12 million square feet – one million more than the planned World Trade Center replacement.

Stuart Rothenberg, global head at Goldman Sachs Real Estate Principal Investments, said the firm was committed to seeing the project through adding that it would create “New York's next great neighborhood.”

He was joined by Stephen Ross, chairman of Related, and Jeff Blau, the firm’s president, who said the Hudson Yards development was a unique opportunity to “shape the future of [New York] City.”

Tishman Speyer outbid rivals Vornado Realty Trust and the Durst Organization by $39 million to develop the site this spring. Other bidders were Extell Development Company, Brookfield Properties and the Related Companies. However, it was reported that Tishman tried to postpone closing on the deal until the eastern half of the site, known as Hudson Yards, was rezoned, a process that could take 18 months or longer.

It was at least the third failed attempt at redeveloping the area. Former New York City mayor Rudolph Giuliani's plan for a football stadium on the site died, as did Mayor Michael Bloomberg's Olympics stadium proposal.

Last night, Bloomberg said that despite the setbacks of the past few weeks he was certain that Goldman Sachs and Related would “realize this tremendous opportunity to develop what is really the only large parcel of undeveloped space left in Manhattan.” He added that all sides had to work together to make the project “a reality.”