The House That L’Oreal Built
Al Barbarino Dec. 17, 2013, 2:47 p.m.
Back in 2011, Coach agreed to pay a reported $750 million for its 740,000-square-foot global corporate headquarters in Related’s South Tower at Hudson Yards.
That deal may have been the official stamp of approval for the massive project rising on the city’s west side, but the announcements in April that SAP America, Inc. and L’Oréal USA had concurrently leased a combined more than half-million square feet of space put the project on the map, solidifying the current view that the project will transform the city.
“If you look at Hudson Yards as an overall development, both the eastern and western yards, it is the most significant development in Manhattan probably since the 1930s,” CBRE’s Robert Alexander, chairman of the firm’s New York tristate region, told The Commercial Observer in June.
“CBRE and Related coordinated the signing of those leases with the ultimate purchase by Coach,” added Mr. Alexander, who declined to discuss the deal further last week. “All of this was executed simultaneously, which as far as I know has never been done in the history of New York real estate—to have major corporations sign major leases like that and a major corporation make that purchase.”
Software company SAP inked a lease for 115,000 square feet for its New York City headquarters (in July, SAP took an additional 30,714 square feet), while L’Oréal leased 402,000 square feet for its U.S. corporate headquarters, both for 15 years and bringing the LEED Gold South Tower to more than 80 percent occupancy
Asking rents, according to Mr. Alexander, were between mid $80s and low $90s.
“When you look at the new product and you look at the deliverables and you look at the fact that that new product can be delivered essentially and effectively under $100 per foot, that’s a compelling argument for some folks,” he said.
In August, Fairway Market, the upscale grocer with more than a dozen locations across the tristate area, inked a 46,000-square-foot deal at the center of the highly anticipated Hudson Yards complex. And at the tail end of October, Related’s Stephen Ross selected British artist and designer Thomas Heatherwick to create the artistic center piece for the new public space at Hudson Yards.
Related is developing the project with partner Oxford Properties Group, with the first phase, the Eastern Yards, comprising roughly 6 million square feet of mixed-use development at an estimated cost of $6 billion.
The South Tower, designed by Pedersen Fox Associates, is a 1.7-million-square-foot, nearly 900-foot-tall office building with ground-floor retail space and 15,000 square feet of terrace space on three levels, slated for occupancy in 2015.
The final product will comprise 26 acres and 15 million square feet of mixed-use space. A Related spokesperson put the total price tag for the project at $15 billion ($20 billion for the 26 acres plus the additional sites Related owns to the north and south).
CBRE declined additional comment for this story.