The Daily Dirt: Why major offices are setting up shop in Hudson Square

Hudson Square, once a quiet Manhattan neighborhood, has found itself in the spotlight lately, thanks to the opening of Google’s New York headquarters at St. John’s Terminal in February. 

Google likes to be on the cutting edge of technology. But it may have been jumping on a decades-long trend — and another megacorporation — in building its 1.3 million-square-foot office in the neighborhood. 

In 2018, Disney first kicked off its relocation to Hudson Square, away from its long-time New York digs on the Upper West Side. In December of that year, Google expanded its leasing footprint in the neighborhood, then purchased St. John’s Terminal at 550 Washington Street for $2.1 billion in September 2021. 

While Google has already opened its new office, Disney’s 22-story headquarters at 7 Hudson Square is getting close to the finish line, according to New York YIMBY.

The two office projects were a huge vote of confidence in a long-forgotten neighborhood with a history as the center of the city’s printing industry.

Twenty years ago, the neighborhood’s semi-industrial brick and mortar buildings scared away office tenants. But, those same buildings appealed to a different kind of tenant. 

“These buildings that decades ago really appealed to manufacturing were the perfect fit for the growing tech sector,” said Frank Wallach, a managing director of research and business development at Colliers.

As those young tech companies moved in, the neighborhood’s identity — and the health of its office market — changed. 

Asking rents increased by an annual rate of 10 percent from 2011 to 2019, one of the sharpest increases in the city during that decade. Average asking rent in the neighborhood is $81.81 per square foot, among the highest in the city. Now, it’s more than just young startups looking for space in the neighborhood. 

“Those investments have spawned others who said, ‘Clearly, if Google’s here, this must be the place to be,’” Governor Kathy Hochul said at the ribbon cutting ceremony for Google’s new digs. 

The latest example is Taconic Partners and Nuveen Real Estate, who revealed their ambitious plans for One Grand in March. The partners are planning a 28-story office tower with 431,000 square feet of space at the property. 

Of course, the neighborhood is facing the same office struggles as the rest of the city. Its availability is over 19 percent, according to Colliers. But its outlook is still much brighter than it was just fifteen years ago. 

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What we’re thinking about: Will more companies follow Google and Disney to Hudson Square? Send a note to david.westenhaver@therealdeal.com.

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Closing Time

Residential: The priciest residential sale on Friday was $14.5 million for a 4,300-square-foot condominium apartment at 551 West 21st Street, 15A, in Chelsea. Tyler Whitman of The Agency had the listing. 

Commercial: The largest commercial sale of the day was $24.9 million at 501 Seaview Avenue, in Staten Island. Staten Island University Hospital was the buyer of the 49,000-square-foot facility. 

New to the Market

The highest price for a residential property hitting the market was $21.5 million for a 4,500-square-foot sponsor unit at 760 Madison Avenue, in Lenox Hill. Sabrina Saltiel and Madeline Hult Elghanayan of Douglas Elliman have the listing. 

Breaking Ground 

The largest new building application was filed for a 32,000-square-foot, 7-story, mixed-use project at 28-03 8th Street, in Astoria. Angelo Ng & Anthony Ng Architects Studio filed the permits. 

— Matthew Elo

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A thing we’ve learned: In the early 20th century, an entrepreneur named George C. Boldt tried to build a castle on Heart Island in New York’s Thousand Islands region. But Boldt abandoned the project after his wife’s untimely death in 1904. The incomplete structure was untouched for 70 years until the Thousand Islands Bridge Authority purchased the island. It has since spent more than $50 million restoring the castle and completing unfinished bits.

Elsewhere in New York

— At least 100 protestors were arrested at Columbia University on Thursday while staging a pro-Palestinian demonstration, New York Times reported. The university’s president, Nemat Shafik, said she called police on the demonstrators due to the “extraordinary circumstances” around their protest. Students and other organizers set up about 50 tents on the campus’s central lawn on Wednesday, a move that may have violated campus protest policy rolled out by the school in February. 

— A Brooklyn Heights co-op complex, Cadman Towers, is set to convert to a city-sponsored affordable housing co-op through a tax break approved by the City Council. This move aims to generate cash from apartment sales to address the $62 million debt burden at the building and fund repairs.

— Just when you thought Times Square couldn’t get any better, the neighborhood will soon become home to the world’s tallest hot dog statue. According to the local TV station WPIX, an artist is planning a 65 foot tall exhibit called “Hot Dog in the City.”