With Facebook In The Bag, Hudson Yards’ Office Space Is Almost Completely Full
After months of rumors, Facebook is officially committed to a sprawling lease across three buildings at Hudson Yards. Its decision to move thousands of workers there — the biggest lease in Manhattan in 2019 — marks a turning point for both the Far West Side megaproject and New York City’s emergence as a major technology hub.
All told, the social networking giant is taking in excess of 1.5M SF across 30 floors at Related and Oxford Properties Group's $25B project, the companies announced Thursday. Facebook will occupy about 1.2M SF at 50 Hudson Yards, some 265K SF at 30 Hudson Yards and approximately 57K SF at 55 Hudson Yards, where it will begin moving employees next year. The entire office portion of the development is now 91% leased, Related and Oxford said in the release. “It’s definitely a game-changer,” Savills Vice Chairman Jeffrey Peck said of the deal. “We have been seeing a seismic shift west and south, and this deal certainly establishes the Hudson Yards submarket as desirable for large tech companies. The smaller tech companies will, of course, follow suit.” This lease is one of the biggest real estate transactions in Facebook’s history, a spokesperson for the company told Bisnow. It is not yet clear which of Facebook’s teams will be at the Hudson Yards offices. Facebook already has space at 770 Broadway, 225 Park Ave. South and 335 Madison Ave. and plans to continue to occupy those buildings. “New York’s vibrant communities, strong business economy and diverse talent base first attracted us to the city in 2007,” Facebook Vice President of Global Facilities and Real Estate John Tenanes said in a statement. “When considering the next phase of our growth in the city, it was important that our newest office space was situated in the heart of a vibrant community that offered access to arts, culture, media and commerce. Hudson Yards offered this and more, and we’re excited to expand our offices there starting in 2020.” Related CEO Jeff Blau described it as an “extraordinary commitment to New York City and Hudson Yards” while Oxford Properties Group Head of U.S. Development Dean Shapiro said the company was “proud to be partnering with Facebook to create the workplace of the future for its employees.” Representatives for Related did not return a request for comment by press time, and Oxford declined to comment beyond the release. A representative for Cushman & Wakefield, which represented Facebook in the deal, did not return a request for comment.
The announcement follows months of speculation about Facebook’s expansion plans. Crain’s New York Business first reported this summer that the Silicon Valley-based tech giant was negotiating for more than 1M SF at three Hudson Yards buildings. But as recently as last month, the company was said to have eyes for Vornado’s Farley Post Office redevelopment a few blocks east of Hudson Yards, and was reportedly considering taking all of the 740K SF space there. Apple is reportedly keen on that space, too, as it looks to expand its presence in the city. This official commitment is a major step for the office space in Hudson Yards, which officially opened in March. The Facebook deal means more than 8M SF of office space at Hudson Yards is committed. 50 Hudson Yards, which is expected to open in 2022 with BlackRock as the anchor, is now 75% leased. With the social networking giant, 30 Hudson Yards, the tallest building at the project, is fully leased, with Facebook joining WarnerMedia, KKR and Wells Fargo Securities. 55 Hudson Yards — with law firms like Milbank, Cooley and Boies Schiller Flexner — is now 99% occupied. Peck said Facebook's lease further solidifies the office leasing migration to Manhattan’s Far West Side, but also shows that major technology tenants desire brand-new buildings. “This is certainly the largest and strongest tech tenant that has committed to the area … and it certainly establishes the submarket as viable for [technology, advertising, media and information] tenants,” he said. “The buildings in the Midtown South submarket can’t support the needs of the large tech tenants, and Facebook obviously saw the need to go to a state-of-the-art building with proper infrastructure.”
Technology companies have become some of the most coveted tenants in the city’s office leasing market as the industry has expanded exponentially. Tech talent employment increased 44% in the city between 2011 and 2018, according to CBRE, and there are multiple companies seeking to establish themselves here with hefty chunks of office space. Amazon, nine months removed from pulling out of its planned headquarters in Long Island City, is said to be on the hunt for a large chunk of space. Among the rumored contenders are the Farley Building and SL Green’s 460 West 34th St. development. It is also reportedly looking at the Morgan North Postal Facility, which Tishman Speyer is redeveloping into 630K SF of creative offices. IBM is also said to be on the lookout for roughly 500K SF of office space to pull all its separate city locations together. Meanwhile, Google is in the process of creating a 1.7M SF campus at the St. John's Terminal in Hudson Square. “[The Facebook lease] is not going to come as a surprise to anybody,” Colliers International President of the Tri-State Region Michael Cohen said. “This is the strength of the city as we enter into the 21st century. We are morphing from the [finance, insurance and real estate] sector, and now it’s technology. Our competition is now [Silicon Valley] and San Francisco, and we are catching up in a very big way.”