In 1913, the Dual Contracts were signed by the Interborough Rapid Transit Company (IRT) and the Brooklyn–Manhattan Transit Corporation (BMT), two companies who operated parts of the present New York City Subway. A set of platforms at Grand Central, now serving the IRT Lexington Avenue Line (), was to be built diagonally under the building site as part of the agreement. At the time, the site under the proposed station was occupied by Grand Union Hotel, which was condemned via eminent domain in February 1914. The condemnation proceedings for the hotel cost $3.5 million (equal to $ million in ). To pay the station's construction cost, the Public Service Commission approved the construction of a 25-story building above the station. By May 1915, the building site had been excavated for the construction of the building. Despite the passage of the 1916 Zoning Resolution, which required architectural setbacks to provide light to the streets below, the building plans conformed with the older zoning codes, which did not require setbacks.