By REBNY President John Banks
A major milestone was reached this week when the first building in Manhattan’s newest neighborhood officially opened its doors. 10 Hudson Yards welcomed its first corporate tenant, Coach and the first wave of Coach employees began moving in.
Hudson Yards is taking a front seat in driving New York City’s economic engine – fueling new jobs and economic activity, along with providing new housing, office, retail and open space.
Following the employees of Coach, many more New Yorkers and visitors will soon be able to explore an entirely new neighborhood with an impact that will be felt far beyond Manhattan’s West Side, as the development generates tax revenue that will support vital city services across the five boroughs. The project will contribute a staggering amount, nearly $19 billion annually to New York City’s Gross Domestic Product.
Hudson Yards is the largest private development project in our city’s history. The construction alone will support close to 99,000 person-years of work, with over $10.6 billion in earnings and $25.6 billion in economic output in New York City.
To put this in perspective, the real estate industry in total generated $16.4 billion in taxes in 2013 (up 6 percent from the year before) – a figure representing 41 percent of the City’s tax revenue, and the activities of our industry had a total economic impact of $116.1 in wages, jobs, and output. For the Hudson Yards project to have contributed roughly a quarter of that through the impact of construction alone is a promising sign of what lies in store in the future.
In terms of actual tax revenue, during the entire construction period, construction activity is estimated to generate approximately $237 million annually. Once the project is completed, Hudson Yards as a whole – including ongoing operations of companies doing business there – will generate approximately $477 million in New York City tax revenues.
This sum will be enough to perform any of a number of functions; it could pay the salaries of approximately 6,000 firefighters, over 6,000 public school teachers, the operating budget of the New York City Department of Parks and Recreation, or the combined operating and capital budgets of the Department of Cultural Affairs.
Once completed, Hudson Yards will completely transform the area, opening up transit access to the broader West Midtown area, providing a much-needed connection between Chelsea and Clinton, and create an unprecedented amount of new high-quality office space and office-based businesses. From a residential perspective, it will provide the housing, public open space, and amenities that experts say are more critical today than ever before in developing an exciting and desirable residential community.
Further influencing residential prospects citywide is the impact this project will have on MTA revenues. Over the 14-year construction period, construction activity will generate MTA revenues of $1.784 billion – more than enough to pay the entire cost of Phase Two of the Second Avenue Subway. Once completed, operations at Hudson Yards will generate an estimated $89 million in dedicated MTA taxes and ground lease payments, which would be enough to either renovate four subway stations, purchase 35 new subway cars, replace 3.6 miles of track and switches, or purchase 136 new houses. Hudson Yards will also annually contribute over $68 million toward payment of debt service on the City’s financing of the extension of the 7 line through payments in lieu of taxes to the City.
When completed in 2025, more than 125,000 people a day will either visit, work in or call Hudson Yards their home. The Hudson Yards project began as an ambitious idea. Today, it is beginning to pay off in many ways and will continue to have a positive impact far beyond its borders. The scale of this project showcases what great things public private partnerships can achieve and proves once again that New York City can not only dream big, but deliver. For more information on Hudson Yards, please visit hudsonyardsnewyork.com.
In other REBNY News:
We will be honoring outstanding leaders in the field of Commercial Property Management at our 13th Annual Commercial Management Leadership Breakfast on Thursday, June 2, 2016 from 7:30 a.m. to 10:00 a.m. at the New York Hilton.
Richard Clark, senior managing partner and chairman of Brookfield Property Group and Brookfield Property Partners, will give the keynote address at this highly anticipated breakfast, where we will be presenting awards to Henry M. Celestino, executive vice president at L&L Holding Company, who will receive the Edward A. Riguardi Commercial Management Executive of the Year Award, among other award recipients. To register, visit www.rebny.com or contact Cindy Ramotar at CRamotar@rebny.com.
REBNY’s Residential Downtown Breakfast Round Robin will be on Friday, June 3rd at the Brotherhood Synagogue from 8:30 a.m. to 11 a.m. Come hear industry experts who will speak for approximately 15 minutes on their topic before rotating to the next speaker, followed by a Q&A session.
The seminar will feature Vivace Maxvictor of Coach, REBNY Broker Counsel Neil Garfinkel, Solomon Algazi of CreditServicez, Craig Price of Belkin Burden Wenig & Goldman, LLP, Richard Grossman of Halstead Property, Matthew Leone of Terra Holdings, LLC, Stephen Kliegerman of Terra Development Marketing, and will be moderated by Karen Gastiaburo of Town Financial District and Co-Chair of REBNY’s Downtown Committee. To register, visit www.rebny.com or contact Angela Donovan at ADonovan@rebny.com.
REBNY’s Annual Golf & Tennis Outing will be on June 6th from 8 a.m. to 8 p.m. at the North Shore Country Club. Sponsorships are available, and registration can be completed online at rebny.com or by contacting Kathleen Gibbs at KGibbs@rebny.com.
On June 7th, the Flatiron/23rd Street Partnership celebrates its 10th year and the neighborhood’s transformation into a dynamic 24/7 mixed-use community. REBNY’s Senior Vice President for Research, Mike Slattery will deliver a presentation on the role zoning has played in Midtown South’s changing landscape, and how Flatiron’s appeal the BID has figured prominently into the success of the area now and in the future.
REBNY’s 18th Annual Retail Deal of the Year Cocktail Party will be on June 7th at the 101 Club from 5:30 p.m. to 7:30 p.m. Come help celebrate the presentation of the real estate industry’s highest honors for commercial retail brokers and network with others in the field! To register, visit rebny.com or contact Desiree Jones at DJones@rebny.com.