What Peloton, Lyft and other tenants pay at Hudson Commons
One of few new buildings near Penn Station with entire floors of modest size
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BlackRock, Pfizer, Facebook, Amazon. In a world of corporate behemoths and aspiring monopolists, there is still some glitz in the New York office market for the little guy. Or the littler guy, anyway.
Hudson Commons, a 17-story glass office building that sits atop a nine-story warehouse, affords somewhat smaller companies their own corner of the sky near Penn Station — for a premium.
Smaller firms pay above-average rents, north of $115 per square foot, to command a whole floor at Hudson Commons. They include biopharmaceutical company Ovid Therapeutics, executive recruiting firm True Talent Advisory and Brevet Capital Management, which relocated its headquarters from Park Avenue, according to ratings agency Morningstar DBRS.
In the upper portion of the building at 441 Ninth Avenue, floor plates in the newly constructed office portion narrow sharply to between 16,000 and 25,000 square feet, up from the roughly 50,000-square-foot plates at the base.
Getting one’s own floor in a new building near Penn Station is difficult for companies that don’t want an expanse of space. Just 1 percent of buildings under construction will have floor plates smaller than 17,000 square feet in the Penn Station submarket, according to the ratings firm.
The two largest tenants at 441 9th Avenue, home-exercise equipment maker Peloton and ride-share giant Lyft, each pay below $95 per square foot. The companies spent $168 million and $17.6 million, respectively, to build out their 336,000- and 100,000-square-foot spaces.
A joint venture between CommonWealth Partners and California pension fund CalPERS bought the building in late 2021 for an eye-popping $1.03 billion — the city’s biggest investment deal since 2019, when 30 Hudson Yards was sold to a Related Companies affiliate for $2.2 billion.
CWP and CalPERS put up a combined $588 million for the purchase, taking the remainder from a $507 million CMBS loan. Documents related to the debt package provide an inside look at the building’s finances.
The building was 73 percent occupied by six tenants as of January when the CMBS loan closed, with Peloton and Lyft accounting for 87 percent of rent revenue.
Cove Property Group and Baupost Group bought the former nine-story warehouse in 2016 for $330 million, then added the glass office building on top at a cost of $800 million. Then the pandemic cast uncertainty over office property values.
Pockets of Manhattan’s embattled office market are looking up including Midtown, which leased 4.8 million square feet in the last quarter of 2021 and was the only major office market where demand exceeded supply last year.
In the Hudson Yards submarket, however, there were 2 million excess square feet of office space — in part because the neighborhood had the highest asking rent, $159.73 per square foot. Tribeca witnessed the largest drop in asking rents last year; they fell to an average of $81.27, according to a TRD Pro analysis.