In its latest issue, Fortune magazine spends more than 4,300 words on the nation’s biggest megaproject: Hudson Yards. Related Companies’ 72-year-old chairman Stephen Ross gave author Shawn Tully a behind-the-scenes look at how he runs his empire and why Hudson Yards is the crown jewel of his long career. The article, titled “America’s Biggest Real Estate Project…Ever”, highlights some lesser-known pieces of the Hudson Yards saga, while shedding light on the way Ross works and what he wants to see (hint: a giant sculpture that will “will be to this city what the Eiffel Tower is to Paris”). The magazine hits newsstands Monday, but the article can be found online (for subscribers only, sadly) today. The whole thing is worth a read, but we pulled nine of the most interesting and little-known factoids for your perusal.
9) The colossal size of Hudson Yards, 26 acres and 18 million square feet of buildings, makes it the largest private real estate project in the history of the United States, hence the article’s title. And Related is making it even bigger by purchasing adjacent parcels (some of which pretty much begged to be a part of the megaproject).
8) Ross graduated from the University of Michigan and is a diehard Wolverines fan. His office is covered with paraphernalia, and his ringtone is the school’s fight song, The Victors.
7) His dad invented vending machines and fuel additives.
6) Because Related bought the railyards from the city, the developer’s land costs are “locked in,” which means that Hudson Yards can become a veritable gold mine for the developer. Tully explains that Related cut deals with the construction unions that lowered building costs, and allowed the company to offer lower prices to early tenants like Coach and (probably) Time Warner. Ross says they’re “breaking even, at best” on current leases, but “the big money is in retail and residential” and residential constitutes half of Hudson Yards. And everyone knows that rentals and condos are way more profitable than office space. Jeff Blau, described by Fortune as Related’s “ace deal maker,” says, “When residential prices rise, so do land costs, which takes away most of the profit. But we’ve locked in our land costs over many years. They can’t be bid up.”
5) Ross briefly worked for Bear Stearns in the ’70s, but got fired for telling his partner to go to hell. His mom lent him $10,000 to pay for his rent and food while he tried to make headway in the development world.
4) He was a really big crybaby about losing the original Hudson Yards bid in Mach 2008 to Tishman Speyer. Tully writes, “Ross was disconsolate. Within days he was telling anyone who would listen that he shouldn’t have been so cautious and rational and should have stayed in the race, even without an anchor tenant. ‘When Stephen lost the first time, he went through an unspeakable litany,’ says Marty Edelman, a real estate attorney with Paul Hastings and a longtime friend of Ross’s. “He kicked everybody and anybody for everything. No one escaped except the doorman—until he finally settled on blaming himself.'”
3) Related’s $20 billion portfolio consists mostly of retail and apartments. In NYC, Related owns and manages 5,000 high-end rental units, and the company has another 1,000 outside of New York. But affordable housing, where Ross got his start in real estate, makes up the bulk of Related’s residential portfolio: 45,000 below-market-rate apartments in 19 states. “Though Related declines to disclose its free cash flow, Fortune estimates that it’s several hundred million dollars a year. That big, recurring income stream gives Related a stability rare in the development world.”
2) The aforementioned financial stability is what made Related such an attractive developer for the Bloomberg administration. Former deputy mayor Dan Doctoroff, now CEO of Bloomberg LP, told Fortune: “We were accused of being too close to Ross, but Ross was the only developer willing to step up on projects like the Hudson Yards. He was also the best at mixed use. Ross shared Bloomberg’s vision of New York more than any other developer.”
1) Ross really truly does want the public plaza’s sculpture to be the centerpiece attraction of the new neighborhood. He previously told New York magazine, he wanted it to be “a modern-day Trevi Fountain” and that idea has only intensified: “He’s holding an epic sculpt-off, auditioning the works not of one great sculptor, but six. The contest is rumored to pit such legends as Anish Kapoor, Jeff Koons, Thomas Heatherwick, and Richard Serra, or others in their class, against one another. According to his staff, Ross is telling the famous contestants to ‘raise their games,’ to create something totally unlike anything they’ve done before. The colossal work will be many stories high and could cost upwards of $100 million. ‘This sculpture will be the greatest tourist attraction in New York,'” Ross immodestly predicts. ‘It will be more than the Christmas tree in Rockefeller Center, but 365 days a year. It will be to this city what the Eiffel Tower is to Paris.”
http://ny.curbed.com/archives/2013/08/29/9_littleknown_facts_about_stephen_ross_and_hudson_yards.php
