Cove enlarges Hudson Yards office project 61%

While some firms are delaying their office projects, Cove Property Group has decided to make its Hudson Yards tower bigger.

Cove filed plans for a 34-story, 535-foot building at 413 Ninth Avenue, estimating construction costs at $179 million.

The firm had filed plans in April for a 31-story, 178,000-square-foot office and retail building at the site. The new filing calls for 286,000 square feet — a 61 percent upsizing.

It’s not clear why Cove decided to enlarge the project, given the uncertainty in the office market and lenders’ reduced appetite for risk. But it likely reflects a belief in the “flight to quality.” Cove did not immediately respond to a request for comment.

Piecing together the development has already been a Herculean task for Cove and its managing partner, Kevin Hoo. Deemed the “most complicated deal almost anyone has seen”  by Manhattan landlord Anthony Kissling, who holds the ground lease, the effort has involved a lease, sublease, sub-sublease and air rights from a nearby condo.

The machinations led to Cove signing the sub-sublease with former New York Gov. Eliot Spitzer and Daren Hornig of Hornig Capital Partners in a transaction valued at $46 million. Cove would pay them, who in turn would pay ABS Partners, which would then pay Kissling.

The project is one block from 441 Ninth Avenue, a Hudson Yards office complex that Cove sold in December 2021 to Los Angeles-based CommonWealth Partners for slightly more than $1 billion. It was the city’s biggest investment sale in two and a half years.

Cove and the Baupost Group had purchased the 700,000-square-foot former warehouse for $330 million in 2016 and redeveloped it into offices for EmblemHealth while adding 17 floors for tenants such as Lyft and Peloton.

Despite low office attendance and companies’ rampant downsizing of office footprints, a number of developers are moving ahead with office projects in New York City.