Mitsui Fudosan America Takes Majority Stake in 55 Hudson Yards as Construction Starts

Related Cos. and Oxford Properties Group now have Japanese company Mitsui Fudosan America as its newest majority stakeholder in the prominent 55 Hudson Yards tower project.
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Construction has started on Fifty Five Hudson Yards, a 51-story, 1.3 million-square-foot office tower being developed by Related Cos. and Oxford Properties Group along with its newest joint venture partner – Mitsui Fudosan America Inc.

The tower, located at the northeast corner of 11th Avenue and West 33rd Street on Manhattan’s Far West Side, is now fully capitalized and estimated to cost about $1.4 billion, according to Bloomberg, which stated the tower is MFA’s largest overseas investment. MFA is the United States-based arm of Japan’s largest real estate company. Various media reports have stated that MFA paid $259 million for a 90 percent stake in the building.

Fifty Five Hudson Yards is part of the 28-acre Hudson Yards mixed-use project estimated to cost between $15 billion and $20 billion to develop. The anticipated LEED Gold building is one of the properties planned for the largest private real estate development in the history of the U.S. When completed, Hudson Yards will include more than 17 million square feet of commercial and residential space, more than 100 shops and restaurants, approximately 5,000 residences, cultural space, a public school, 175-room luxury hotel and 14 acres of public open space.

“We are pleased to partner with Related Cos. and Oxford Properties Group on Fifty Five Hudson Yards which we consider a new trophy property in the Mitsui Fudosan U.S. and global portfolios,” Yukio Yoshida, president & CEO of MFA, said in a joint news release.

Yoshida said Related and Oxford are “experienced developers with a proven track record for delivering world-class projects, making them ideal partners.”

He added that Hudson Yards is “fast becoming one of the most desirable locations for top echelon tenants, offering an unparalleled modern, mixed-use environment.”

A spokesperson for Related told Commercial Property Executive there “are no signed leases at this time, but we are in advanced conversations with a number of prospective tenants.”

Stephen Ross, Related chairman & founder, called MFA “one of the world’s most established real estate developers and investors.” He added that their partnership “further solidifies the appeal of Hudson Yards with both global capital and global companies.”

Fifty Five Hudson Yards, located across from the new No. 7 subway extension, is expected to be completed by 2017. It is the third tower under construction. The first office tower, 10 Hudson Yards, a 52-story, 1.8 million-square-foot building, is scheduled to open later this year. The main tenants are Coach Inc., L’Oreal USA, SAP and Fairway Market, which is taking the ground floor retail space. Time Warner Inc. will be moving its headquarters into about 1 million square feet at 30 Hudson Yards, an 80-story, 2.6 million-square-foot office skyscraper due for completion in 2018. In September, Neiman Marcus announced it would occupy 250,000 square feet in a three-level store anchoring the 1 million-square-foot Shops at Hudson Yards opening in 2018. Almost a year ago, construction began on the $700 million Eastern Platform, which will cover active train tracks and serve as a foundation for much of the Hudson Yards development.

MFA’s investment in Fifty Five Hudson Yards is part of Mitsui Fudosan Group’s global expansion under its “Innovation 2017” strategy to diversify the company’s nearly $39 billion portfolio by investing outside Japan. In New York, MFA’s holdings include 1251 Avenue of the Americas, a 54-story trophy office tower, and a 26-story Class A office building at 527 Madison Ave. The company also has invested in office assets in Los Angeles, San Francisco and Washington, D.C., and has expanded its development program to include multi-family projects.

Foreign investment in U.S. commercial real estate has been escalating in recent years. Part of the development team for Hudson Yards, Oxford Properties Group, is Canadian. Another Canadian investor, Ivanhoe Cambridge, and its joint venture partner, Callahan Capital Properties of Chicago, acquired Three Bryant Park, a 1.2 million-square-foot office building in midtown Manhattan, this month for $2.2 billion. It was the second largest single office building transaction ever in the U.S.