Hudson Yards

In March 2019, on the west side of Manhattan, 13,000 people flocked to the Hudson River to witness the unveiling of Hudson Yards, the largest private real estate venture in U.S. history. However, just a year later, the vibrant energy of that opening seemed a distant memory as the new construction lay silent amidst the pandemic.

The once lively corridor of luxury skyscrapers and high-end commercial spaces along the Hudson River had been subdued by closures and urban vacancies. With an extraordinary investment of approximately $30 billion, the ambitious neighborhood appeared to teeter on the brink of failure. Yet, five years later, Hudson Yards not only persevered its initial spirit but emerged as a beacon of resilience, becoming, according to The New York Times, the most sought-after workplace in New York City.

Amidst a shift in remote and hybrid work models, the neighborhood’s glass and steel towers have become magnets for some of the world’s most esteemed companies – BlackRock, Pfizer, Ernst & Young – willing to pay astronomical sums for prime real estate and locations. A remarkable resurgence that silenced even the critics who once looked suspiciously upon the Hudson Yards project, deeming it a soulless enclave catering solely to the wealthy elite. While the office sector thrives, other components of the project, particularly luxury residential buildings and a large shopping center, have struggled to take off. This divergence underscores the growing gap between the fortunes of elite office towers like those around Grand Central Terminal and the broader challenges facing Manhattan’s real estate landscape.

Across Manhattan, the office vacancy rate has reached approximately 18%, nearing record levels with no immediate signs of improvement. However, in Hudson Yards, vacancy rates remain below 10%, with several buildings boasting full occupancy. Rental prices have soared, with some spaces commanding nearly triple the city average. The resurgence of pedestrian traffic, especially at the neighborhood’s shopping center, signals a promising recovery, with companies reporting attendance rates similar to pre-pandemic levels. In particular, employee presence exceeds 80% on weekdays, in stark contrast to the subdued activity observed in other office buildings across the city. Initially criticized as an unnecessary gift to promoters and developers, the tax incentives provided by the city have proven instrumental in the success of Hudson Yards.

Developers argue that without these incentives, the project would have been at risk. The recent relocation of Cravath, Swaine & Moore, a prestigious law firm, to Two Manhattan West, further solidifies Hudson Yards’ status as a premier business hub. Major corporations cite the allure of modern, expansive office spaces as a primary attraction, with companies like BlackRock consolidating their operations within the neighborhood, setting a new standard in luxury office spaces.

Photo via 15 Hudson Yards

Hudson Yards has always been an ambitious real estate project, spanning approximately 28 acres, located on the west side of Manhattan and developed by the Related Companies. The goal was to transform a windswept railyard into a new luxury destination for the global elite, creating a new residential area with skyscrapers, luxury stores, restaurants, and exclusive services. However, almost a decade after its inception, the project has faced difficulties in achieving this goal. At 35 Hudson Yards, one of the residential towers in the project, approximately 50% of the units remained unsold by the end of June, more than four years after sales began – according to the WSJ.

To stimulate sales, Related has had to reduce prices and offer incentives such as covering taxes and closing costs for buyers. Recorded sales at 35 Hudson Yards show an average price decrease of 30% compared to the initial listed prices. Some units have been sold at discounts of over 40%. Additionally, the project has faced competition from a wide range of luxury condominiums in Manhattan, with greater discounts offered compared to other areas of the city. In contrast, another residential tower in the project, 15 Hudson Yards, initially fared better and is nearly sold out after almost seven years of marketing. Despite efforts to promote the new neighborhood, reception to Hudson Yards has been mixed. While some appreciate the luxury stores, restaurants, and tourist attractions, others describe it as a place lacking authentic personality, characterized by soulless glass skyscrapers.

Furthermore, the proposal to introduce a casino at Hudson Yards has raised concerns among potential buyers, who worry about attracting large crowds and tarnishing the area’s upscale image. Related has responded by stating that if they are fortunate enough to obtain a gaming license, they will create a tasteful world-class resort that enhances the offerings at Hudson Yards. Currently, Related still has over a billion dollars worth of condos to sell at Hudson Yards. Despite the challenges, the company remains optimistic about future sales and has been sending out contracts for many units at 35 Hudson Yards. However, luxury property prices in Manhattan are experiencing a decline in sales, and many buyers are seeking to resell their units at prices lower than their initial purchase, preparing for potential financial losses.