The company would move to an 80-story skyscraper to be built as part of the Hudson Yards project, at the railyards at 10th Avenue and 33rd Street, once an industrial neighborhood of warehouses, factories and tenements.
If it is approved by Time Warner’s board this month, the deal will be a coup for Related Companies, the developer of the 26-acre Hudson Yards project as well as the Time Warner Center, which combines a hotel, condominiums, luxury retail and office space at Columbus Circle.
At the same time, an investment group led by Related is expected to pay Time Warner about $1.3 billion for the company’s space at the two-tower Time Warner Center complex. Under that agreement, Time Warner would lease its space at Columbus Circle for about five years, or until the new tower was completed. Related also plans to move its office to Hudson Yards from the Time Warner Center.
Time Warner’s brokers, Douglas Harmon and Amy Spies of Eastdil Secured, have lined up a second buyer for its current space in case the company is unable to complete a final agreement with the Related group.
“They’ve found a new home,” said one executive who had been briefed on the Time Warner deal but was not authorized to discuss it, “and they found a winner for the old home.”
In the West Side deal, Time Warner would buy more than half the space in the 2.4-million-square-foot Hudson Yards tower, presumably to be renamed Time Warner Center. Time Warner, which is in the process of spinning off its magazine portfolio, Time Inc., would move its executive suite to the new tower along with its HBO, Turner Networks, CNN and Warner Brothers offices.
Executives involved in the deal were reluctant to discuss it because the final papers had not been signed. But word of the pending deal has been coursing through the real estate industry.
This year, Related started work on a 47-story office tower in Hudson Yards, at the northwest corner of 30th Street and 10th Avenue, which will be home to Coach, the luxury retailer; L’Oreal USA, the beauty products company; and SAP, the software company.
But it needed a corporate anchor for the second, larger tower to build the rest of the multiblock site on a platform over the railyard between 10th and 11th Avenues. The new complex would comprise the two office towers, a glass-walled luxury mall between them, a cultural institution, a 72-story residential building and a 60-story mixed-use tower with a hotel, office space and condominiums at the top.
Related has been willing to sell its office space at cost to lure Time Warner, one of the few corporations in the market for new space, and get the rest of the complex under way. The developer expects to make money on the retail and residential portions of the project.
Related and its partner, Oxford Property Group, are now betting that Time Warner’s move to Hudson Yards will establish the area as a new commercial district, much the way the company transformed Columbus Circle when it moved there a decade ago.
Related is currently building a residential building nearby and closing on a separate parcel at 33rd Street and 11th Avenue. It also has the rights to build over the adjacent railyard between 11th and 12th Avenues.
At the same time, Related expects that companies will leap at the chance to pay a premium for the old Time Warner office space at Columbus Circle, and presumably, the opportunity to put its own name on the high-profile complex.
But large companies have moved cautiously in the current market, making many developers squirm.
Jeffrey L. Bewkes, Time Warner’s chairman and chief executive, first signaled his plans in 2011 to consolidate the company’s operations in a modern, highly efficient, albeit less luxurious, tower by 2017, when many of the company’s leases expire.
Time Warner hired the brokerage firm Studley to look for a new home, touching off a frenzy among the city’s top developers, including Boston Properties, Extell Development and Brookfield Properties.
Article source: http://www.nytimes.com/2013/07/02/nyregion/time-warner-intends-to-move-to-planned-west-side-tower.html?partner=rss&emc=rss
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