Who's Moving to the Hudson Yards District?
While no tenants have signed on to the 29M SF of office planned for the Hudson Yards District other than Coach, L’Oreal, and SAP in spring ’13 and Time Warner in January, panelists at the Bisnow Future of Manhattan’s Far West Side event last week say big announcements are on their way. (This is the real summer blockbuster.)
400 joined us at Espace on West 42nd Street, where Related’s Stephen Winter, who oversees leasing for the 5.5M SF of office planned at Related and Oxford’s Hudson Yards, says he’s working on a few big transactions. He also says he's talking to a lot of law firms about 55 Hudson Yards. C&W global brokerage chair Bruce Mosler, who handles leasing for Brookfield’s 2.8M SF of office planned for Manhattan West is trading paper on the vacant space at 450 W 33rd. Brookfield is overhauling the property, to be rebranded 5 Manhattan West, for $200M. It’s just the kind of open, efficient space TAMI tenants want, Bruce says, adding that TAMI tenants have just bumped out financial services as the sector with the most SF of office requirements.
Bruce, whom we snapped laughing at (er … we mean with) his buddy, Avison Young tristate president Arthur Mirante, recalls that Mayor Bloomberg envisioned the Hudson Yards District, not least because of its proximity to the High Line, and the government incentivized westward new development like Hudson Yards, Manhattan West, and Moinian's 3 Hudson Blvd (our event's sponsor). The efforts, though, are also giving new life to old buildings like 450 W 33rd and the rest of the Far West Side’s inventory. Arthur also says developers' commitment to open space like Hudson Boulevard Park, diverse uses like resi and retail (such as Fairway's lease in Hudson Yards), and community space like the 95k SF in Extell's apartment building at 40th and Tenth attract office users.
Hudson Yards District sits among the already-humming neighborhoods of Chelsea, Tribeca, and Hell’s Kitchen. Stephen tells us that within Related’s resi portfolio, the High Line-hugging Caledonia is pulling in the highest rents and the Upper East Side is getting the lowest, an unimaginable dynamic 10 years ago. Stephen also points out that when the first Hudson Yards office building delivers next year, half the US workforce will be Millennials. When the last one delivers in 2025, that young cohort will form 75% of the labor pool. (In 2045, they'll be 110%, though math was never this generation's strong suit.) In other words, demand is not something about which Stephen worries.
No one was really sure the massive Hudson Yards project would work until L’Oreal signed on, says CBRE’s Howard Fiddle, who works with Stephen on leasing. (Coach had signed on first, but its lease was contingent on a second major tenant.) Now, Howard equates the doubters to those who stuck with horses and buggies after the Model T. As hot as the Far West Side submarket is, though, Howard says large users are neighborhood agnostic. It’s the quality of the office product they chase, he says, and that’ll drive conversions of obsolete office to hotel and resi. That, in turn, will complete the circle, making every neighborhood live/work/play.
Brookfield US development head Phil Wharton's company was no doubter about the Hudson Yards District. His company bought the land that will become Manhattan West from Olympia & York in the ’90s, except for 450 W 33rd, which it bought three years ago.
Moinian Group development director Oskar Brecher and World Trade Center Properties Janno Lieber also work for companies that had long-term visions for the area. Janno’s boss, Larry Silverstein, bought the parcels for the River Place and Silver Towers apartments on 42nd in 1984. The former opened 15 years ago and the latter in ’09. And it was 20 years ago that Joe Moinian bought the parcel for the planned 1.8M SF 3 Hudson Blvd—which anchors Hudson Boulevard Park and provides direct access to the 7 line subway station. Moinian also owns the Eleventh Avenue block front from 25th to 26th and has considered a museum, resi, a hotel, entertainment, and dining for the site, which Oskar calls the northern anchor to Chelsea.
For 605 W 42nd at Eleventh Avenue (same block as Moinian's Atelier condos), the developer considered more condos, a private school, a hotel, even an aquarium (which is like a condo for fish). Ultimately, Oskar says, demand dictated that the company go with the easiest use, apartments, and it’ll deliver in fall ’15. He expects financing for the 1,100-unit, 1.2M SF building to close in July, following up last week’s announcement that AIG has provided debt on the land for 3 Hudson Blvd, whose website launched Wednesday at www.3hudsonblvd.com.
Tishman Speyer New York regional director Chris Shehadeh (right, whom we snapped with our moderator, WeiserMazars real estate partner Ron Lagnado) says his company is still in design on the Hudson Yards District site it bought in February. It plans 2.8M SF along Hudson Boulevard from 34th Street to 35th. And Silverstein is figuring out exactly what uses to include in its 90k SF lot on Eleventh between 40th and 41st. (Is everyone just waiting 'til after the World Cup to make any decisions? We totally understand not wanting to miss anything.)
