The breakthrough completed the train storage section between 26th Street and 34th Street along 11th Avenue.
The city-funded $2.1 billion extension of the 7 line is the first subway expansion in decades.
The project will help transform the Hudson Yards vicinity into a vibrant 24-hour neighborhood, containing a mix of commercial, residential, retail, open space and recreational uses.
In January of 2005, the City Council approved the Bloomberg Administration's plan for re-zoning the Hudson Yards area, including the Eastern Rail Yards.
On Monday, the plan to revitalize a bleak stretch of land along Manhattan's west side waterfront was approved by the Council, but the project remains without financing and it will likely be many years before any buildings go up.
The City Council approved a rezoning plan for half of the 26-acre rail yards known as Hudson Yards for apartments, hotel space, parks and other development, which is the last step of public approval for the entire project.
The other half was rezoned in 2005, but the developer and the transit agency owner have yet to close on a lease and construction has not begun.
The Metropolitan Transportation Authority owns the land and selected the developer, the Related Companies, in 2008. The property is now used for Long Island Rail Road operations.
Jay Cross, who oversees the project for the developer, said Monday that the parties have agreed to have a contract by the end of January. But as for building, the timeline is much more cloudy.
"It's a 10-year process, at least, to build up the Yards," Cross said. And there's no date set for when it will begin.
The plan - among the most ambitious redevelopment ventures of Mayor Michael Bloomberg's administration - first requires multibillion-dollar platforms to be constructed over the rail yards before construction can take place. That won't start until at least 2011, Cross said.
The first half of the project rezoned several years ago allows for office, hotel and retail space, as well as public open areas.
The portion under consideration Monday focused more on residential use, plus cultural space, a new public school and green space. The proposal also ensured that 20 percent of all residential units will be affordable housing, or 1,150 apartments out of more than 5,700.
Cross said the initial development plan called for building to begin first in the more commercial half of the project, as soon as tenants sign up. But he said Monday that the Related Companies could end up starting with residential first, if the housing market recovers in the next several years.
He said Related expects to have renderings of residential buildings in the next year or two.
The neighborhood is now dominated by warehouses, parking lots and a convention center but has few options for public transit.