Posted May 1, 2013, 3:49 PM
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http://therealdeal.com/issues_articles/the-far-side/
Office developers compete for anchor tenants on Manhattan’s western edge
With only a finite number of large potential renters, the fight for office tenants on the West Side is heating up.
May 01, 2013
By Adam Pincus
Quote:
Only a few times in modern Manhattan history has an entirely new office district sprung up all at once. In the 1930s, there was Rockefeller Center; the 1970s saw the World Trade Center complex; and today, developers are planning nearly 15 million square feet of new office space in the Hudson Yards area in the 30s on the Far West Side. The new projects expected to rise over the next decade include the Related Companies’ North and South towers at Hudson Yards, Extell Development’s One Hudson Yards, Brookfield Office Properties’ Manhattan West and Moinian’s 3 Hudson Boulevard, as well as Sherwood Equities’ 447 10th Avenue and Alloy Development’s 450 Hudson Park Boulevard.
But before starting construction on these new towers, developers must first land an anchor tenant willing to take at least 400,000 square feet of space. With only a finite number of large potential renters, the competition for office tenants is heating up, as some of the city’s top commercial leasing brokers and developers battle each other with slick marketing campaigns and — of course — behind-the-scenes jabs at rival projects.
In 2011, fashion manufacturer Coach signed on to be an anchor tenant of Related’s South Tower. But Coach was already located a few blocks away, in a building directly in the path of Hudson Yards bulldozers. For many of the other big companies whose names are being kicked around as possible anchor tenants, a move to the Far West Side would represent a significant geographic shift from Midtown or Downtown.
There are currently 10 to 20 companies said to be on the hunt for large chunks of Manhattan office space, brokers said. These include media companies Time Warner, Sony, CBS and News Corp.; law firms White & Case and Skadden, Arps, Slate, Meagher & Flom; advertising firm GroupM; financial giant Credit Suisse; and fashion house Ralph Lauren.
Brokers for the new Hudson Yards–area towers are fighting to lure these tenants, but their efforts could be in vain if companies decide to stay in their current locations, or move to existing office towers instead. Despite these challenges, Hudson Yards so far appears to be beating the odds. Last month, Related snagged two more tenants for the South Tower: French cosmetics maker L’Oreal and software firm SAP.
3 Hudson Boulevard
Developer: The Moinian Group
Size: 1.8 million square feet
Expected completion date: 2016
Some consider the Moinian Group’s 3 Hudson Boulevard to be the best-positioned of the Far West Side’s new buildings: It sits on top of the No. 7 subway station and across from the Jacob K. Javits Convention Center.
Another advantage to the FXFOWLE Architects–designed project is that “you are not on a platform, you are on bedrock,” said Arthur Mirante, president of the tristate region for commercial firm Avison Young, which is handling leasing at 3 Hudson Boulevard. He said he also points out to potential tenants that “no water got anywhere near this with [Hurricane] Sandy. [Yet] you are on the Hudson River with water views.”
Like Related did with Coach, Moinian will look for prospective tenants that would want to sell their existing building in exchange for a condo unit at 3 Hudson, Mirante said.
Asking rents in the 1.8 million-square-foot building are currently $85 per square foot, according to Mirante, but ultimately, “We hope to achieve in excess of $100 [per foot] in the tower.”
A challenge facing the project is that while Moinian is well known as a residential developer and an office owner, the firm has limited experience as a ground-up, Class A office tower builder. Moinian’s residential management was criticized in the wake of Hurricane Sandy, and insiders said the company’s access to construction financing is not as strong as other developers’. For that reason, sources expect Moinian to partner with a more-established office landlord to move the project forward, much as it did with SL Green Realty at 3 Columbus Circle.
In response to those criticisms, a spokesperson for Moinian said the company has three decades of development experience and strong relationships with lenders, and issued the following statement: “The Moinian Group is looking forward to breaking ground on 3 Hudson Boulevard and efficiently delivering this elegant office tower to Manhattan’s new West Side.”
The spokesperson declined to comment on whether Moinian is planning to partner with another developer on the project.
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