Jeff Blau: A natural to run huge NY site
Updated: 2015-04-24 11:25
By Paul Welitzkin in New York(China Daily USA)
Related Companies CEO Jeff Blau said the Hudson Yards project in New York is designed to mix with the flow of the city and will essentially become another neighborhood. Arman Dzidzovic / for China Daily
It's almost as if Related Companies CEO Jeff Blau was born to develop Hudson Yards, a city-within-a-city project that might be the largest real estate development in US history.
For the past 25 years, Blau has been responsible for directing and overseeing new developments worth over $20 billion in virtually every sector of the real estate industry at The Related Cos.
Under his leadership, Related has helped to revitalize the Union Square area and built the Time Warner Center. Now Blau is overseeing Hudson Yards, a 28-acre site on Manhattan's West Side between 30th and 34th streets and 10th Avenue and the West Side Highway.
"Hudson Yards is not meant to be a separate city," he told China Daily on Tuesday in an interview. "It is designed to mix in with the flow of New York. It will essentially become another neighborhood in the city."
Hudson Yards will include 18 million square feet of commercial and residential development space, more than 100 shops, 20 restaurants, 5,000 residences, 14 acres of public open space, a public school and a luxury hotel. Related says it will draw more than 24 million visitors a year and create more than 23,000 construction jobs.
Since his childhood, Blau seemed destined for a major role in real estate development. Growing up on Long Island, Blau accompanied his father, a builder and developer, to job sites and meetings.
When he was an undergraduate at the University of Michigan, he signed up for a graduate-level real estate development class. Most students use an internship to obtain practical experience in preparation for graduation. Blau took that concept to another level by affiliating with a contractor in Ann Arbor, Michigan, to buy single-family homes and subdivide them into student apartments.
While Blau was at Michigan, he attended a real estate seminar in which Stephen Ross, an alumnus of the school and then CEO of The Related Cos, was a featured speaker. After an introduction by a professor, Ross lured Blau to New York City to work at Related and began what has become one of the most successful alliances in New York real estate history.
Blau acknowledged that the EB-5 investor immigrant visa program has provided an important source of funding for Hudson Yards. "It's not just the Chinese who are involved," Blau said. He estimates that about half of Hudson Yards' EB-5 money is from Chinese investors.
The federal EB-5 visa program is designed to attract overseas entrepreneurs and investors by offering them a green card in exchange for an investment of at least $500,000 in a project that produces at least 10 new jobs in the US. Blau calls the program an "important economic development and stimulus tool for the economy".
Blau said that if EB-5 didn't exist or were eliminated "it wouldn't have stalled Hudson Yards. But I think the project would have happened later and been much more expensive."
Financing for Hudson Yards has come from all over the globe. "We have worked with a lot of lenders from China," he added.
Blau said Hudson Yards is about five times as large as the company's Time Warner Center development in New York. Time Warner Center transformed Columbus Circle into a thriving urban neighborhood. The 2.8 million square-foot, vertical mixed-use property includes the world headquarters for communications giant Time Warner Inc, the Mandarin Oriental Hotel and 40 specialty shops.
Blau said Related learned a lot from the Time Warner development that is helping to drive the Hudson Yards project. "We want to build and maintain first-class buildings. We extend that philosophy to include the latest green-energy techniques and the latest technology innovations," he said.
What may truly separate Hudson Yards from other developments is the fact that it is being built on elevated platforms that will cover one of the world's busiest rail yards.
Blau said Hudson Yards will have its own utility (microgrid) to provide power, hot water and steam to the development; a campuswide Wi-Fi system will ensure Internet connectivity. Hudson Yards scored a major coup when luxury retailer Neiman Marcus said it would open a store in 2018.
Right now the New York City real estate market is hot. What happens to Hudson Yards if the market cools off?
"If you are doing a project that is going to take 10 to 15 years to complete, you almost have to plan for a recession or downturn," said Barry Hersh, professor of real estate at New York University's Schack Institute of Real Estate. "We haven't abolished business cycles yet.
"These are very smart and experienced real estate professionals," continued Hersh. "By using EB-5 funding, that means they have less debt. They also would be able to finish a building and then maybe delay the start of another building until the economy improves. They will have options."
Related is involved in some overseas projects. Last October, a joint venture between Gulf Capital and Related and the Al Tayer Group announced that two iconic US department stores, Macy's and Bloomingdale's, would open shops at Al Maryah Central, a 2.3 million -square-foot shopping center being developed on Al Maryah Island in Abu Dhabi.
Related operates a small office in China, which Blau said is a great place to invest capital. "Development is difficult in China," he said. "It is a lot harder to be a developer than it is to be an investor in China right now."
Blau said Related is currently focused on its US developments. He believes that the US economy is running in a stable mode with "exceptionally strong pockets of activity in New York, San Francisco and Los Angeles. These areas are thriving right now because they attract a strong flow of capital from around the world."
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