New York is currently experiencing a renaissance in new commercial development, especially of the mixed-use variety.
Later this year, Related Cos. and Oxford Properties Group will start construction on the first tower of the Hudson Yards, a 26-acre mixed-use project on Manhattan’s West Side. When completed, Hudson Yards will contain approximately 12 million sq. ft. of commercial and residential space, including 6 million sq. ft. of offices, 750,000 sq. ft. of retail, 5,000 apartments and a 300-room five-star hotel.
The New York Metropolitan Transportation Authority will open a new subway station near the site, at 11th Avenue and 33rd Street, in order to make the area more accessible to commuters.
Coach Inc. has already signed a 600,000-sq.-ft. for its global headquarters at the first Hudson Yards tower. But Related and Oxford still have to secure more tenants for the building, which will contain a total of 1.7 million sq. ft., according to Andrew Simon, of Colliers.
In the long-term, however, New York real estate insiders expect Hudson Yards to be a success.
“It’s an example of a new development that will create demand,” says Ronald Dickerman, of Madison International Realty. “It changes neighborhood by neighborhood, but in general, New York City will always be a desirable location of office, retail and multifamily users.”
Construction is also underway Downtown, on the new World Trade Center complex. That development, overseen by Silverstein Properties and the Port Authority of New York and New Jersey, will include six office towers containing more than 10 million sq. ft. of office space and 550,000 sq. ft. of retail.
The Downtown project, however, gives people more pause. While there is every expectation that the new offices will be leased—in 2011, for instance, Condé Nast signed a 1 million-sq. ft. deal to relocate to One World Trade Center from Midtown—the area has a lot of older office stock.
“There is a lot of office space being delivered [Downtown], it’s very high quality and very high cost, and it changes the dynamics for existing office space there,” Dickerman says. “We are concerned about the amount of space being delivered because, frankly, we think it’s more space than the market is going to be able to absorb.”
At the same time, there are smaller construction projects planned around the city, including Hines’ 7 Bryant Park tower.
Hines markets its new building as the opposite of Hudson Yards: a boutique development that doesn’t have to become the headquarters of a major global corporation, but can house many different kinds of companies looking for smaller chunks of space. When completed, the 28-story tower will contain 474,000 sq. ft. of rentable office space. Hines aims to secure LEED Gold certification for the property for features such as bicycle storage, high-performance façade, a storm water retention system and a co-generation system.
“For us, a Midtown presence in a building that doesn’t compete in size with One World Trade Center or Hudson Yards is attractive,” says Tommy Craig of Hines’ New York office. “New York is under-supplied with new space and the solution has been to create mega-projects and if you have 5,000 people in the same space, you need a project of that scale. But I think New York’s also got significant growth in all user classes and we have a project that will appeal to all [kinds] of users: financials, services, media, technology, etc.”
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