NEW YORK CITY-In what City Council Speaker Christine Quinn onThursday called “a great day for the West Side and the future ofNew York City,” the year-long tunneling project on the Number 7subway line expansion was completed. City officials held a ceremonymarking the completion of the first phase of a $2.1-billion projectto bring the subway line to what will eventually be the HudsonYards redevelopment.

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“For decades, people have talked about the Hudson Yards onManhattan's Far West Side as a potential opportunity to provide newoffice space, housing, parks and jobs adjacent to the world’spremier business district, but nothing ever happened,” says MayorMichael Bloomberg in a statement. “We’re acting to make sure thatit does.”

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Up next will be work on station entrances and finishes andsupport facilities such as ventilation and traction powersubstations. The new service is expected to open in December 2013,according to the Metropolitan Transportation Authority.

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Whether that new service includes a stop at Tenth Avenue and41st Street, a block east and seven blocks north of its currentterminus at Eleventh Avenue and 34th Street, remains to be seen.The Tenth Avenue stop was originally planned but was scrapped in2008 when the Hudson Yards Development Corp. said the fundingwasn’t there to build two stations. However, following a lobbyingcampaign led by the Real Estate Board of New York, the Bloombergadministration earlier this month said it was applying for $3million in federal TIGER II grants for a feasibility study onreinstating the Tenth Avenue station, which would cost about $550million to build—money neither the MTA nor the city says it canspare.

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As reported in the Wall Street Journal earlier thismonth, the administration’s proposed redesign of the TenthAvenue stop would entail building a station with two entrances andtwo separate platforms, one for eastbound trains and one for thosecontinuing west to the line’s new terminus at Eleventh Avenue. Thiswould allow the station to be built after the rest of the extensionis completed, assuming that funds become available.

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Completion of the tunneling portion of the 7 line extension,which involved a pair of 1,000-ton tunnel boring machines, occurs afew weeks after another milestone in the redevelopment ofManhattan’s Far West Side. In late May, Related Cos.—originallychosen in 2008 to develop the Hudson Yards project—announced thatit had signed a binding contract on a 99-year lease with the MTAfor the 26-acre site. It came to the agreement with a new generalpartner, Oxford Properties Group, the real estate investment anddevelopment arm of Canadian pension fund OMERS, the OntarioMunicipal Employees Retirement System.

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The new agreement, approved by the MTA’s board this past spring,delays closing on the project until certain triggers are reached inthe city’s real estate market. Related will not be obligated toclose on the deal, and start paying its 99-year lease, untilMidtown’s office availability rate declines to 11%, apartment saleprices reach an average $1,200 per square foot and the AIAArchitectural Billings Index hits 50.

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Currently, the availability rate in Midtown is 13.7%, accordingto CB Richard Ellis, while Prudential Douglas Elliman puts theaverage apartment price at $1,051 per square foot. Work on theHudson Yards project, which will also include construction ofelevated platforms over the Eastern and Western Rail Yards that arein daily use by the MTA’s Long Island Rail Road, is expected tobegin after the 7 extension is done.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.