Ilaina Jonas and Joan Gralla
NEW YORK Nov 1 Luxury retailer Coach Inc said it planned to buy 600,000 square feet in a tower
being built by developer The Related Companies, making it the
first company to claim space in Manhattan's Hudson Yards.
Coach said on Tuesday that it had signed a letter of intent
to buy the lower third of the 51-story tower, but financial
details have not been finalized.
The company currently leases 225,000 square feet at 450
West 33rd Street, and owns its headquarters at 516 West 34th
Street and a smaller adjacent building.
The 26-acre site, bounded by West 42nd and 43rd Streets
between 7th and 8th Avenues and West 28th and 30th Streets and
Hudson River Park, is one of the last under-developed spots in
Manhattan. Plans call for a park, "cultural shed" for events,
5,000 residences in nine buildings, 6 million square feet of
offices, 1 million square feet of shops, a school and a hotel.
Construction on the tower is due to begin in mid-2012, and
it is expected to open in 2015.
Related Companies' chief executive Stephen Ross said his
company would eventually move to Hudson Yards from the Time
Warner Center, which it also built.
Mayor Michael Bloomberg spearheaded the Hudson Yards
development, which requires building a $750 million roof over
The city has sold debt to pay for extending the No. 7
subway line west and south from Times Square to the
development. The subway link is expected to be finished by late
"The market has spoken. The far West Side's economic
potential is becoming a reality," Bloomberg said at a news
conference that was attended by Coach and Related Companies.
Mary Ann Tighe, chief executive of CBRE Group Inc ,
New York Tri-State Region, and Greg Tosko, vice chairman of
CBRE consulting, represented Coach in the transaction.
Bloomberg said he did not think the city risked having an
oversupply of office space, despite the 10 million square feet
planned for the World Trade Center.
He cited pent-up demand from companies that had wanted new
headquarters before the recession and said, "New York is still
the magnet; New York is where people want to come."
New buildings usually are more desirable to tenants, said
Sam Chandan, chief economist at Chandan Economics.
"While new buildings may result in the overall increase in
the vacancy rate, the buildings themselves will perform very
well," he said. "It will be at the expense of leases currently
in place at other properties."
The Hudson Yards project stalled during the recession, and
Related Companies stepped in after another developer gave up
the project. Oxford Properties Group, part of the OMERS
Worldwide Group of Companies, is a general partner.
Critics of the project have said that developers are
receiving too many subsidies from the city. For instance,
because the land on which Hudson Yards is being built is owned
by New York state's mass transit agency, the city cannot
collect property taxes on it. It will get payments instead.
Related Companies has said that it is getting a 40 percent
break on payments in lieu of taxes for the first 5 million
square feet of commercial space.
But Coach's decision to move to the new tower could help
the city's $66 billion budget. New York City must repay
interest on $3 billion of subway bonds until the new buildings
produce enough tax revenue to pay the interest, probably in