http://www.therealdeal.net/issues/No...1194216929.php
City makes way for Hudson Yards
Buildings on far West Side seized for massive redevelopment
Tenants at 545 West 34th were told to leave.
By Katherine Dykstra
November 2007
When Alan Bleviss, a small business owner who rented office space on far West 34th street between 10th and 11th avenues, received a letter on August 1 from his new landlord telling him that he would have to relocate, he was disappointed but not surprised.
Since he moved his company, Pineapple Sounds, which does voiceovers, into 545 West 34th Street two years before, he'd been hearing rumblings among the other tenants about the massive redevelopment planned for the area known as Hudson Yards, including a possible extension of the No. 7 subway line.
But the rumors had been flying for so long that no one seemed to know what to believe, including whether any of it would ever come to fruition.
"I moved in from New Jersey, and I expected to die there," says Bleviss. "People told me in the building that this has been going on forever -- that this will never happen."
But it is happening.
The city officially seized Bleviss' building, Infinity Court, a live/work construction owned by the Moinian Group, in August, and tenants moved out last month. The building was one of 11 taken by right of eminent domain in order to make room for the creation of the Hudson Park and Boulevard, which will eventually traverse the middle of the block from 33rd Street all the way to 39th Street. That's part of a grand redevelopment planned for the area, the rezoning of which was approved in January of 2005: The overall plan calls for 24 million square feet of Class A office space, 13,500 units of housing and a million square feet of retail, among other area improvements, which include the park and the 7 train extension.
The Park and Boulevard project will be constructed in two phases, and the seizures that occurred in August represent only the first group. The city has until October of 2015 to take the properties -- sited from 37th through 39th streets -- to complete the second phase of the project. (Like Moinian and the others who owned property taken for phase one of the project, those businesses are already aware that seizure is impending.)
According to Marya Cotten, vice president of acquisitions at the Hudson Yards Development Corporation, 60 companies, including 33 residents and 30 businesses, were affected in the initial condemnation.
Planning for the future subway station to be built at 34th Street and 11th Avenue called for the relocation of business, but the city was able to negotiate with all of the owners of those buildings -- including a catering facility; the FedEx warehouse on the south side of 34th Street, which will relocate to the Bronx; and the Copacabana, the site of which was bought by Extell -- and thus no condemnation needed to take place.
Those in the real estate world appreciate the effect of the change on smaller businesses like Bleviss'.
"There will be a transition period during which time there will be some adjustments for people," says Martin Ezratty, a director of sales at Eastern Consolidated.
"I think that's a fair question about where those people [small businesses] go... The city has a huge incentive to accommodate those people in Brooklyn or Harlem," says Simon Wasserberger, senior vice president of CB Richard Ellis.
"From a city planning perspective, you could always find a home for those guys. What you can't always find a home for is a million-foot bank."
Wasserberger's point -- that the far West Side near the Hudson Yards is the only place in the city with enough square footage to accommodate such industry -- is well-taken. By not developing the area, the city would run the risk of losing that business to New Jersey or elsewhere, which could be very costly.
Times Square lite
With the redevelopment, if Eighth Avenue and Times Square are any indicator, the area is likely to become one of the highest in terms of property values in the city.
"They're achieving numbers [office rents] well into the $100s [a square foot] in Times Square now," says Jeff Katz, the owner of Sherwood Equities. "This [area] will be leased at a discount to Times Square, but that's just for the first wave. It will be a prime-central business district with 26 million square feet."
Katz himself invested in the area more than a decade ago by purchasing a commercial site with the potential of 2.5 million square feet of space at 34th and 10th, and a residential site kitty-corner to it at 10th Avenue and 35th Street. He purchased the commercial site in 1985 when there was talk of the Javits Center changing the area. He has been sitting on both properties, waiting until he sees signs of growth in the area to develop.
Robert K. Futterman, a retail broker, also has his eye on the area.
"We rep tenants who want to be there, landlords who are developing space," he says. "[Condo projects are] bringing more people to live in the neighborhood. The more people that live there, the more need there'll be for service-oriented businesses."
But with progress sometimes comes pain. The city paid Bleviss for his trouble, though he was reticent to disclose how much. It also retained the services of the Cornerstone Group to help the tenants of 545 West 34th Street find new space.
"I think we're being very proactive about trying to assist people to move -- so they have the cash to put money down on a new lease," says Cotten. "And they have more flexibility than with other companies because they'd be tied to leases they can't break ... all they have to do is give [us] notice, and they can move on."
Despite the offer of a free broker, Bleviss opted to find a space himself. He left on October 8, choosing to move before the city moved him. He now says he's happy with his new office space, which is located on Seventh Avenue and 54th Street. "I have a couple hundred dollars more a month in rent, and it was disruptive -- I lost a week of work moving," says Bleviss. "But they forced me to move to a better location."
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