http://www.nytimes.com/2008/02/21/ny...on&oref=slogin
Work to Begin on Platform Over Tracks on the West Side
By CHARLES V. BAGLI
February 21, 2008
Despite a flagging economy,
Brookfield Properties says it will start work in June on a $600 million platform over railroad tracks near Ninth Avenue, where it plans to build two towering office buildings.
Brookfield, a major commercial landlord in Manhattan, has owned the property between Ninth and Dyer Avenues, between 31st and 33rd Streets, for more than 22 years. But it has had difficulty luring a prominent company to what has long been regarded as Manhattan’s last real estate frontier.
The company now says the time is ripe to begin work. Development is pushing westward, and the site is only one block west of Pennsylvania Station. The vacancy rate for Manhattan office buildings is still relatively low, and the credit markets should recover fairly quickly from the subprime mortgage crisis, said Richard B. Clark, chief executive of Brookfield. “For a long time, we believed that the West Side would be the city’s next commercial zone,” Mr. Clark said. “It’s clear that the time is now to make something of this site.”
Brookfield’s project is no simple matter. More than half of the five-acre site is over railroad tracks, which extend from Pennsylvania Station to the West Side railyards. Brookfield must build a three-acre platform, while trains continue to run below, before it can start putting up its first building. It hopes to sign a major tenant during the two years the job is expected to take.
Brookfield’s architect, Skidmore, Owings & Merrill, has designed two towers, a 1.9-million-square-foot building at the northeast corner of the site and a 3.4-million-square-foot building at the southeast corner.
In many respects, the project is a warm-up for the West Side railyards, where five developers are competing for the development rights. At the railyards, between 10th and 12th Avenues, from 30th to 34th Streets, developers will have to build two 13-acre platforms, at an estimated cost of $1.5 billion. They would then have the right to build 12 million square feet of high-rise office and residential buildings. Brookfield is one of the companies expected to submit a second round of bids to the Metropolitan Transportation Authority on Tuesday. But with concerns about the economy growing, many real estate executives and government officials worry that developers may reduce their offers.
Brookfield is not alone in pushing forward with new office projects. Even so, some real estate executives warn that some of those projects could be postponed, especially if the developer lacks an anchor tenant, and new buildings may not rise over the West Side railyards for years.
Over the past five years, developers have largely ignored office projects in favor of erecting lucrative residential towers, even though the destruction of the World Trade Center sharply reduced available office space. In that time, developers built only 16 commercial buildings with a total of 14.4 million square feet, according to the Real Estate Board of New York.
As companies expanded, space became tight and commercial rents soared, with many prime buildings now fetching more than $100 a square foot in annual rent. So developers are once again putting up office towers, some without an anchor tenant. There are four towers under construction, with a combined total of 6.7 million square feet, and another four towers with 11.3 million square feet planned.
SJP Properties is building a 1.1-million-square-foot tower at Eighth Avenue and 42nd Street. To the north, Boston Properties is excavating a site between 54th and 55th Streets for a 39-story, 1-million-square-foot building that is scheduled to be finished in 2010. A year from now, Boston Properties and its partner, Related Companies, plan to start a second tower, with 900,000 square feet, at Eighth Avenue between 45th and 46th Streets.
“We obviously continue to feel good about west Midtown,” said Robert E. Selsam, senior vice president of Boston Properties.
At the World Trade Center site, the Port Authority of New York and New Jersey is building the 2.6-million-square-foot Freedom Tower, and JPMorgan Chase has signed a deal to erect a 1.3-million-square-foot building nearby. And on Church Street, the developer Larry Silverstein is beginning work on what will be three 60-story skyscrapers with a total of 6.2 million square feet.