Related’s Hudson Yards Drawing Office Tenants Leaving Old Spaceby
New York developer ‘building the office spaces of the future’
Vacancies freeing up cheaper space for startups, CEO Blau says
Related Cos. has leased 5 million square feet (46,500 square meters) of newly built office space at its Hudson Yards project on Manhattan’s far west side and is negotiating contracts with tenants interested in an additional 2 million square feet, the developer’s chief executive officer said.
Office tenants are seeking space at the $25 billion project, what Related calls the biggest private real estate development in U.S. history, and vacating New York’s older towers that no longer suit their needs, Jeff Blau said today in an interview on Bloomberg Television. About half of New York City’s existing office space is more than 60 years old, he said.
“The way people work today is different than how they worked 50 years ago,” Blau said. “We are building the office spaces of the future: modern technology, efficient layouts and heating and cooling systems.”
Related’s project is being built on 28 acres (11 hectares) at the site of the Metropolitan Transit Authority’s West Side Rail Yard. The first tower completed at the site, 10 Hudson Yards, opened in May and is fully leased to companies including Coach Inc., L’Oreal USA and Boston Consulting Group. Another skyscraper under construction, 30 Hudson Yards, will have occupants such as Time Warner Inc., KKR & Co. and Wells Fargo & Co. The office buildings are part of a broader plan calling for retail, residential and hotel properties.
Blau’s optimism is in contrast to remarks made yesterday by billionaire investor Sam Zell, who said he doesn’t see a lot of growth in the the U.S. office market and that New York doesn’t need the additional supply being built at Hudson Yards.
“They’re building Hudson Yards, adding 10, 12 million square feet of office space -- I don’t see 10 or 12 million feet of additional demand,” Zell said in a Bloomberg Television interview.
The vacancies being created at older buildings are “good for New York City” in that they free up lower-cost offices for startups and companies that can’t afford space in the newer towers but want a Manhattan address, Blau said. Older offices also can be converted into hotels and residential properties, he said.
Newly constructed buildings are a “retention and attraction tool,” he said. “People are moving to locations where their employees want to be.”