Tony Malkin throws shade at Hudson Yards’ new observatory

Empire State Realty Trust completed upgrades to spaces in its Observatory in October

TRD NEW YORK /
Feb.February 27, 2020 06:00 PM
Empire State Realty Trust’s CEO Tony Malkin and Hudson Yards' The Edge (Credit: Getty Images)

Empire State Realty Trust’s CEO Tony Malkin and Hudson Yards’ The Edge (Credit: Getty Images)

The battle for views is heating up but Empire State Realty Trust CEO Tony Malkin isn’t worried.

In fact, he’s “eager” to “play it out,” he said during the real estate investment trust’s fourth-quarter earnings call in reference to the March opening of Related Companies’ 1,100-foot-high observation deck at 30 Hudson Yards, dubbed Edge.

When it comes to the Edge’s imminent launch, Malkin said he was “confident” it would open “with quite a splash, with a big spend.” But “having seen the Edge, we feel very good.”

“The entrance and the security is really not well laid out. It’s not going to support high volume. The experience itself, aside from the elevator, is very sterile and modern,” he said.

Malkin noted during the call that he’d gotten a glimpse of the not-yet-open observation deck at 30 Hudson Yards after attending a client event hosted at the lofty venue. He said that he viewed the Edge as competing for tourists with One World Observatory, but noted that Related’s platform has “a nicer restaurant and an outside deck.”

“That’s about it as far as subtle features,” he concluded.

Related Companies declined to comment.

Malkin’s comments come on the heels of ESRT completing its multi-year upgrades of the Empire State Building’s Observatory. Last fall the REIT reopened its 102nd-floor viewing gallery, which had been closed for the first three quarters of 2019, as well as space on its 80th floor.

The Observatory reported $37.7 million in revenue for the fourth quarter of 2019, up 9.2 percent from $34.5 million in the same period in 2018. Quarterly net operating income increased more than 13 percent year-over-year to $29 million from $25.6 million.

But total annual visitors to the Empire State Building’s viewing deck declined nearly 8 percent to 3.5 million. The company attributed the drop to the upgrades and bad weather in 2019.

Related Companies’ prices for general admission to the Edge is in the $30-range for a fixed time to more than $50 for flexible arrival.

At the Empire State Building, standard pricing for the 86th-floor deck ranges from $36 to $42 with no time requirements. To also visit the 102nd floor, patrons pay between $66 and $72 — or $108 to skip the lines.

“We like our competitive position there,” said Malkin.

But the Empire State Building’s observation galleries are facing more competition than just The Edge.

SL Green Realty’s viewing platform, The Summit, will debut next year in its One Vanderbilt office tower in Midtown East. The company hasn’t released pricing but expects gross revenue of $110 million starting in 2024, based on a presentation to investors the company gave in late December. That’s a $33 million increase from its estimate in 2018. Minus operating expenses, SL Green expects its observation to bring in $47 million in net operating income.

There’s also growing concern over how the coronavirus’ spread will affect tourism.

“The fact is, though, that there will be more competition. And the fact is that if we have something that extends broadly beyond China to impact international travel, we have a significant — as we’ve disclosed previously — international component to our visitors,” Malkin admitted. “[But] at the moment, in the steady state world, we feel pretty comfortable.”

Write to Erin Hudson at [email protected]


Related Articles

arrow_forward_ios
(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

The Observation Deck at Hudson Yards (Credit: Adam Pogoff)

Views from 1,100 feet: A tour of Related’s “the edge,” the tallest outdoor observation deck in the Western Hemisphere

Facebook CEO Mark Zuckerberg and Hudson Yards (Credit: Getty Images and Wikipedia)

Facebook close to finalizing Hudson Yards office deal: report

(Credit: iStock)

EB-5 is back in the doghouse

Amid coronavirus fears and restrictions on large gatherings, the Empire State Building has closed its observation deck. (Credit: ESBNYC)

Empire State Building observation deck closed by coronavirus

Georgetown president and CEO Adam Flatto and an aerial of 260 12th Avenue (Credit: Patrick McMullan/Patrick McMullan via Getty Images; Google Maps)

Georgetown plans 1.1M sf Hudson Yards office building

Steve Ross, Eliot Spitzer and a rendering of 451 10th Avenue (Credit: Getty Images) 

Spitzer, Related land $276M in financing for Hudson Yards senior housing project

From left: 330 Madison Avenue, 66 Hudson Boulevard and 599 Lexington Avenue (Credit: Google Maps)

Law firms topped the list of January’s biggest office leases in NYC

arrow_forward_ios
Loading...