The Real Deal New York

The Hudson Yards hustle

With Related furiously locking in tenants, a look at who’s signed and how much space is left
in the megaproject

November 01, 2015
By Rich Bockmann

From left: 10 Hudson Yards, 55 Hudson Yards and 30 Hudson Yards

From left: 10 Hudson Yards, 55 Hudson Yards and 30 Hudson Yards

Last month’s topping-off ceremony at 10 Hudson Yards was marked by the usual fanfare associated with such events — jeans-clad construction workers were assembled alongside suited executives, speeches were made and concrete was hoisted and poured.

There was good cause for celebration. The 52-story tower represents the first of Related Companies’ five planned office buildings on the Far West Side. With 94 percent of its space spoken for, 10 Hudson Yards will open its doors in the spring to tenants such as Coach and L’Oreal.

But in terms of the Hudson Yards project as a whole, it’s just the beginning. Construction is already under way on the second and third towers at the 28-acre, 17-million-square-foot development. And the ink is already dry on some leases.

In addition, a seven-story, 1-million-square-foot mall will be home to more than 100 shops, including Neiman Marcus, which is taking 250,000 square feet across three floors.

To be sure, the total square footage already locked up — a figure The Real Deal calculates to be 3.92 million square feet — is an impressive sum. But for Hudson Yards, it’s only about 40 percent of the 9.9 million square feet of planned office space for the entire project. That includes the sale late last month of a 343,000-square-foot office condo to the private equity firm KKR.

Related and its partner Oxford Properties will undoubtedly face increasing competition from neighboring developments, which were arguably spurred by Hudson Yards. Altogether, Brookfield Property Partners, the Moinian Group and Tishman Speyer plan to develop roughly 10 million square feet of office space in the surrounding area. With that in mind, here’s a look at the status of Related’s project and who’s already measuring the windows for curtains.

10 HUDSON YARDS

The first of five planned office properties in Hudson Yards, the 1.7-million-square-foot building is nearly full. The office space starts eight stories atop one of the tower’s signature features: a cantilever over the High Line and a retail area that includes a 46,000-square-foot market. Above that, there’s only a minimal amount of space that hasn’t yet been spoken for.

Floors 9-23
Power of the purse: Coach 

The haute handbag-and-accessories company made headlines in 2013 when it struck a deal with Related to buy a 738,000-square-foot office condo in the building, becoming the anchor tenant. Coach — which, according to Real Capital Analytics, paid $530 million for the space — provided the financial lynchpin Related needed to move from the planning to construction phase. The company is currently headquartered in a nearby building, which Related owns and will demolish to make way for a planned fourth tower: 50 Hudson Yards. “The fact that our global corporate headquarters will be adjacent to the top of the High Line is particularly exciting,” Coach CEO Victor Luis said in statement when the deal was announced.

Floors 24-25
Branding giant: VaynerMedia 

The digital marketing company behind campaigns for companies like General Electric, Pepsi and Sonic Drive-In announced last month that it would lease roughly 68,000 square feet in the building. Founded in 2009 by entrepreneur and social media guru Gary Vaynerchuk, the company was named one of AdAge’s A-List standouts for 2015. With a workforce that is more than 50-percent millennials, Vayner’s current headquarters at 315 Park Avenue South is a creative environment that includes touches like a vending machine with the founder’s face on it entitled “Gary Venderchuk,” according to Fortune magazine.The company should have an inside track on how the project is progressing — it will be sharing the 24th floor with Related’s Hudson Yards residential marketing center.

50-hudson-yards

50 Hudson Yards

Floors 27-36
Because they’re worth it: L’Oreal USA 

The world’s largest cosmetics company is relocating from its NYC headquarters at 575 Fifth Avenue to 432,000 square feet at 10 Hudson Yards. The deal, which was announced in 2013, will put the beauty brand, represented by the likes of Beyoncé and Jennifer Lopez, in the center of some good action a few years from now. New York Fashion Week will move its new home to the Culture Shed, a performing arts venue set to open on the Hudson Yards site in 2018.

Floors 40-47 (approximately)
Corporate America with a conscience: Boston Consulting Group

Boston Consulting Group, which is reportedly taking 200,000 square feet in the building, consistently ranks as one of the best companies to work at by Forbes. That’s partly because the global management-consulting firm offers employees up to a year of a “Social Impact Leave of Absence” to volunteer on a local or global project spearheaded by a nonprofit organization.

Floors 48-52
German engineering: SAP America

SAP America, the subsidiary of a German technology giant that creates business software for companies like eBay and Kraft Foods, had originally signed on for about 115,000 square feet, but decided it needed more elbow room. It has now locked in 144,272 square feet and will occupy five full floors. Related announced the deal in 2013 at the same time as the L’Oreal transaction. Both came shortly after the developer secured $1.4 billion in debt and equity for the tower.


30 HUDSON YARDS

The 90-story, 2.6-million-square-foot tower began rising this past summer after Related inked a megadeal with Time Warner. When completed in 2019, 30 Hudson Yards will be the second-tallest office building in the city at 1,296 feet, and the tallest of the Hudson Yard’s buildings. The building has 342,000 square feet available, after the buyout firm KKR & Co. said it was buying 343,000 square feet, the top 10 floors, at press time. Below are the other tenants who have signed on.

Floors 14-51
Media powerhouse: Time Warner

Time Warner is playing musical chairs at Related’s buildings. In early 2014 it made the long-held rumors official, announcing plans to move to Hudson Yards from Related’s Time Warner Center. Related bought the media company’s Columbus Circle headquarters for $1.3 billion in 2014, freeing Time Warner up to buy a 1.6-million-square-foot commercial condo at Hudson Yards’ second tower. With the relocation, Time Warner will consolidate its subsidiary companies CNN, Warner and HBO — 5,000 employees in total — under one roof. “I think the appeal of Hudson Yards is that it’s this emergent neighborhood, a new Midtown,” said Michael Colacino, president at Savills Studley who was part of a team that represented Time Warner in the deal. “I think in five to six years we’ll be surprised we ever thought about it as being far away.”

Floor 66
Welcome aboard, partner: Oxford Properties

Related may be the headline name on the Hudson Yards mega projects, but it has a big financial backer in Oxford, the wholly owned subsidiary of Canada’s Ontario Municipal Employees Retirement System, which is providing up to $475 million in equity for the project. Not surprisingly, Oxford, which has a U.S. headquarters at 320 Park Avenue, is taking a full-floor condo for itself.

Floors 67-72
Live-in landlord: Related Companies

Related, which has about 700 employees in three offices, will also trade in its 100,000-square-foot space at the Time Warner Center and move its main operations into a six-floor condo at 30 Hudson Yards. According to Related officials, company chairman Stephen Ross and his wife, Kara Ross, will be taking a new home in one of Hudson Yards’ residential buildings. They will no doubt be setting the bar high. Earlier this year, their Time Warner Center penthouse was featured in Architectural Digest. In addition, Related CEO Jeff Blau, who currently lives on the Upper East Side, recently told the Observer that he would move to Hudson Yards once his kids are older.

From left: Related’s Jay Cross, president of Hudson Yards, David Boies, and Related CEO Jeff Blau

From left: Related’s Jay Cross, David Boies and Related CEO Jeff Blau

55 HUDSON YARDS

Related broke ground on the 51-story, 1.3-million-square-foot tower in January, while in advanced negotiations with its first tenant, the law firm Boies, Schiller & Flexner. The tower, which was designed by Pedersen Fox and Pritzker Prize-winning architect Kevin Roche, is being built in partnership with Japanese developer Mitsui Fudosan America. Tenants will have the option of having balconies, an amenity developers are using to attract tech and media types. According to Jay Cross, president of Related Hudson Yards, Related is primarily looking to lease, not sell, space in this building.

Floors 14-16
Legal royalty: Boies, Schiller & Flexner 

In June, the law firm of superstar litigator David Boies — best known for representing Al Gore in the 2000 presidential voting recount case — became the first tenant to ink a deal in the building. The firm, which has about 100 lawyers and is currently headquartered at 575 Lexington Avenue, signed on for 83,000 square feet. Arthur Mirante of Avison Young, who represented the law firm in its lease, said the transaction is a sign of the momentum in the Hudson Yards district. “This 1.3-million-square-foot building is now being built with only an 83,000-square-foot tenant. That’s as close as it comes to being built on spec,” he said.

50 HUDSON YARDS

Goodbye, burgers and fries. Related made some serious headway last month on its fourth tower when it bought the McDonald’s at the corner of 34th Street and Tenth Avenue. The building, which is zoned for more than 2.3 million square feet of development, is still in the design phases. Cross told TRD that there will most likely be a small residential component and that Related is considering including a hotel. The details are sparse, but construction is estimated to begin in 2017.

PHASE 2: WESTERN YARD

With a total of 6.2 million square feet of mixed-use development scheduled for completion in 2024, the second phase of Hudson Yards will be roughly half the size of the first. Sitting between 11th and 12th avenues with views of the Hudson River, it will include seven residential buildings, compared to two in Phase 1. It will also include a 750-seat public school. And, Related is planning a 2-million-square-foot office building. Other than that, details are thin. “Except for getting the zoning, we haven’t really given it much thought,” Cross said. “The Western Yard will be driven by market demand.”

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