In the 1980s, when ad agency Saatchi & Saatchi Compton Worldwide ditched “Mad Men”-era Madison Avenue in favor of moving downtown to 375 Hudson St., it was seeking what others have now discovered.
Speaking then to the New York Times, a Saatchi exec explained, “For creative people, the galleries, shops and restaurants there are a more exciting concept than being across from the General Motors Building.”
Back then, rents were $20 a foot. Now, as rents climb beyond $100 for certain floors in some buildings, the area, renamed Hudson Square, has attracted international behemoths like Google and Disney in various office projects.
They’re flocking to a neighborhood bounded by Canal Street to the south, Houston Street to the north, Sixth Avenue to the east and the Hudson River to the west.
“There’s an intimacy about it,” says Ellen Baer, president of the Hudson Square Business Improvement District (BID). “There’s a special vibe here.”
According to Cushman & Wakefield, the 11 million-square-foot submarket known as Hudson Square/West Village runs all the way north to West 14th Street. For the first quarter of 2019, the vacancy rate was 9.6%, up from 2018’s 7.3%. Yet overall asking rents leaped to $87.61 per foot, up from $77.18 a year ago.
Once known as the Printing District for its high-ceilinged lofts and large-floor plates that were sturdy enough to support printing presses, today, the light, views and ambience are attracting all sorts of tech and media companies.
Since French ad behemoth Publicis Groupe bought Saatchi in 2000 and went private, it has gradually consolidated its other owned creative companies inside 375 Hudson St. Among these are SapientNitro and Rokkan.
(Ironically, reversing course, Publicis sent Saatchi back to Midtown at 1675 Broadway two years ago.)
Back downtown, the Lee Harris Pomeroy and Emery Roth & Sons-designed building at 375 Hudson was refreshed by developer Tishman Speyer and became LEED Gold. It now has the largest availability in the area, with 277,000 square feet on the second through fifth floors. These have giant floor plates of 64,000 to 71,200 feet and were formerly occupied by the Penguin division of Random House, which has gone uptown.
“There’s a lot of light and air and a lot of sky,” says Richard Bernstein, who is leading the Cushman & Wakefield sublease team. “The area has great old real estate. Ours is glass and steel and a lot of brick and masonry — all the ingredients that the technology companies like.”
A large tenant would require the current 2025 expiration to be extended directly with the Trinity, Norges and Hines venture that now owns the building on Trinity-owned land. That’s why the space is being offered in conjunction with the building’s CBRE team, led by Paul Amrich. Rent for the available block is in the $70s per square foot. Rent at the top of the building can be more than $100 a foot.
“The whole TAMI industry dominates the area,” Bernstein adds. “The large floor plates give them flexibility in the workplace. That’s why there is next to no space there.”
Google has taken over or purchased many of Chelsea’s largest office buildings, including Chelsea Market. The tech giant is now looking to Hudson Square for its expansion. It is well on its way to creating a 1.7-million-square-foot campus through the leasing of even more properties in the latter area.
A proposed ferry route between Hudson Square and Chelsea was another lure for Google, according to Paul Darrah, the company’s director of NYC real estate. Google has also leased 480,000 square feet at Pier 57 at West 15th Street, where renovations are still underway by Youngwoo and RXR.
Last year, Google also committed to other offices, inking large leases at Jack Resnick & Sons’ 315 Hudson St., Trinity/Norges/Hines’ 345 Hudson St. and St. John’s Terminal, a warehouse at 550 Washington St. along the river being redeveloped by Oxford Properties.
“Hudson Square represents the way we will enable the doubling of size,” Darrah said in a talk before the Real Estate Board of New York in March. The campus will focus on its global business operations and sales, he added. Like other companies, Google concentrates on “space that makes our employees productive,” with a focus on teams.
At 345 Hudson, the search-engine pioneer initially was going to sublease from Penguin Random House, which stepped aside to allow a direct deal with the Trinity/Hines/Norges building.
At Resnick’s 315 Hudson, Google will have a large block of floors with open-plan workspaces. Employees will have access to amenities like a rooftop garden, indoor and outdoor event spaces and a cafe.
Google will also have a dedicated lobby.
In a statement about 315 Hudson, Jack Resnick & Sons president Jonathan D. Resnick, said, “We recognized about a decade ago that Hudson Square was destined to become a hub for New York’s growing creative, tech and office users. We’ve been hard at work transitioning our buildings to serve the needs of today’s most innovative companies who are looking for large, highly collaborative spaces within the city’s most vibrant live-work communities.”
Nearby, Disney paid Trinity $650 million for a 99-year lease on a development site at and around 304 Hudson St. Making the announcement in July 2018 about the project, called 4 Hudson Square, Disney CEO Robert Iger said, “The Hudson Square district is rapidly becoming a dynamic, innovative hub for media, technology and other creative businesses.”
To the east, Larry Gluck bought and renovated a two-building complex, now called One Soho Square. Sitting next to Sixth Avenue between Spring and Vandam streets, it has already attracted Warby Parker, MAC Cosmetics, Glossier, Aetna and others. Rents were in the $60s when Andrew Peretz of Newmark Knight Frank first worked on the building. Now the newly added penthouses command $120-per-square-foot rents with other floors achieving more than $100.
“We are seeing numbers that are spectacular,” adds Peretz. Data company CoStar shows a tenant that leased in 2004, prior to the renovation, had a starting rent of $24 per foot. Its 100,000-square-foot office is now for rent for much more.
Hudson Square’s 2013 rezoning has led to numerous new apartment and condominium buildings rising in the area. Residential highlights include projects by Extell and Toll Brothers, as well as a Renzo Piano-designed condo by Bizzi & Partners on Vandam Street. “The buildings that are going up are overall really respecting the masonry buildings,” says Baer.
A $27 million pedestrian-friendly streetscape project has also added trees and other improvements. There are bike- and dog-friendly places, plus bars and restaurants. The Jackie Robinson Museum opens later this year at 75 Varick St.
“It’s all about lifestyle,” says Baer. “What landlords are having to create elsewhere is happening here organically.”