Hudson Yards: Shifting New York’s center of gravity
The largest private development in the history of North America is achieving office rents that are nearly 30 percent greater than the Manhattan market average
New York City did “live, work, play” before it was cool. The city has long had what developers across the country seek to replicate when they build mixed-use developments that provide workers and residents with everything they need at their fingertips: theaters, restaurants, bodegas, bars and places to exercise adjacent to transit-friendly apartments and high-paying jobs.
So it makes sense, then, that when developers The Related Companies and Oxford Properties sought to create a city-within-a-city on a 25-acre plot above an active rail yard on Manhattan’s West Side, their vision would take what was organic to the city’s ethos to another level, creating a mecca that would impact the notion of live, work, play in metropolises around the world.
That project is Hudson Yards, the largest private development in the history of North America. It would bring the broader Midtown West district 36.6 million square feet of ultra-luxury offices, residential condominiums, hotels, restaurants, schools, cultural centers, green spaces and even a vertical mall. A place to work, work out, shop, eat, drink and never want to, or have to, leave — though if one had to, an extension of the 7 subway line connecting the project to Times Square and Grand Central Terminal would get you there. It’s a dramatic display of live, work, play, even for a city like New York.
“This project’s success is of interest way beyond New York — this is testing out live, work, play on a scale like never before, and other cities and developers throughout the world will be watching closely,” says Peter Riguardi, the president of JLL’s New York brokerage.
A decade later, the first phase of the developers’ vision is complete. The subway extension is up and running, 5.5 million square feet of Hudson Yards and 2.4 million square feet of the adjacent development Manhattan West has been delivered. The result is so powerful that it’s shifting “the city’s center of gravity west,” Riguardi says.
When it comes to drawing in residents and hotel guests, luxury is Hudson Yards’ key tactic.
The Equinox Hotel set to open in June says it will cater to “those who want it all.” The 212-room hotel will house a 60,000-square-foot gym and its rooms will come equipped with “proprietary sleep systems” that ensure “every night is a dream come true.”
The 143 luxury apartments Related recently began selling in the top 39 stories of the 72-story 35 Hudson Yards building also speak to this ethos. Replete with quartzite counters, eucalyptus cabinets and German limestone, the average price of a unit is $11 million, or more than $3,000 per square foot.
Most office buildings in New York City, especially Midtown where they’re concentrated, are more than 50 years old, on average. But the less-developed West Side has given landlords an opportunity to create new offices from scratch, designed to accommodate the needs of modern companies and the tastes of the younger workers they hope to attract amidst a growing labor shortage.
“Offices these days are a key part of HR for companies, and when you’re able to build offices tailored to the exact needs of the tenants you’re trying to attract, you’ve got a major competitive advantage,” says Riguardi, whose team represented BlackRock in its 850,000-square-foot lease at 50 Hudson Yards, which spans 15 floors.
Owing in part to this advantage, Hudson Yards and surrounding development projects now regularly achieve office rents that are nearly 30 percent greater than the Manhattan market average, according to Craig Leibowitz, a New York research director at JLL.
Related and Oxford landed their first tenants for Hudson Yards in 2013 when Tapestry, L’Oreal and a software firm signed on to move their headquarters into 10 Hudson Yards, a 1.7 million-square-foot, 47-story office building.
Since then, Hudson Yards, Manhattan West, and surrounding projects have been successfully luring a diverse group of high-profile corporate tenants westward from Midtown, including Time Warner, EY, Accenture, KKR, and Wells Fargo, as well as law firms Cooley and Boies Schiller Flexner.
As momentum builds around the district, landlords in the surrounding area are rehabbing their existing offices as developers build new ones close to the action.
Vornado Realty Trust is building and redeveloping 9 million square feet of property adjacent to Penn Station — the busiest transit hub in North Americas — just blocks away from the Hudson Yards and Manhattan West projects. Dubbed the Penn District, the company is rehabilitating PENN 1, PENN 2 and the Farley Post Office to unlock higher rental rates and has ground-up offerings available for prospective anchor-sized tenants.
And in December, SL Green Realty Corp. announced it was under contract to acquire a 91-year-old, 21-story building near Hudson Yards at 460 West 36th Street to upgrade it, promising it wouldn’t remove its “older funky vibe” entirely.
“There’s going to be an arms race to try to take advantage of this movement west,” says Leibowitz.
New York isn’t known for its malls. But in betting $2 billion on one — a 720,000-square-foot vertical mall dubbed The Shops — the developers of Hudson Yards are showing they believe that even a mall can succeed when it is part of a larger live, work, play vision.
“People don’t come to New York to see malls, per se,” says Leibowitz. “But they do come for food and shopping and culture, and if it’s good they’ll take the 7 train to the end of the line — and then tell their friends about it.”
In addition to the mall, Hudson Yards has dining and drinking options called The Restaurants. Celebrity chefs David Chang, Jose Andres and Thomas Keller are opening new concept restaurants there this year.
And if the food and shops aren’t enough to lure traffic, then Hudson Yards has a honeycombed spiral staircase, The Vessel, and a 200,000-square-foot performing arts center, the Shed.
The developers’ ambitions are grand — they want The Vessel to be an icon defining the city. They want The Shed to do for the West Side what Lincoln Center did for Upper West Side. And they want to create a culinary mecca.
Live, work, play
All in all, Hudson Yards will undoubtedly be successful if enough people feel the way Stephen Ross, founder and chairman of Related Companies, feels about Time Warner Center, his previous live/work/play development where he now lives.
In an interview with New York Magazine, Ross described working at Time Warner, eating at the restaurants on the property, buying groceries at the Whole Foods downstairs and catching shows at Jazz at Lincoln Center.
“I don’t even go outside sometimes,” he told the magazine.