But critics of Hudson Yards said the city billed the project as “self-financing”. Instead, the New School report pegs taxpayer costs at $2.2 billion so far, including the foregone revenue from the developer tax breaks and spending on a public school and performing arts venue there.
“We are missing the point if we argue that the project would eventually pay for itself,” said Bridget Fisher, co-author of the report, in an email. “If taxpayers understood from the start they were ultimately on the hook, perhaps they would have preferred to invest $2.2 billion in something other than a luxury development.”
While coronavirus dealt a blow to New York City’s commercial property values, Hudson Yards has fared better than other areas. Property-tax revenue generated in the development that backs the bonds is projected to decline just 6% this year after growing more than five-fold since 2015.
Asking office rents in Hudson Yards average $118.54 per square foot, the highest in New York City, according to Cushman & Wakefield, a commercial real estate services firm that prepared a development and revenue report for this week’s bond sale. Taxable assessed values of four completed towers in Hudson Yards fell less than 1% this year, compared with almost 12% for commercial real estate overall. Occupancy rates in the completed office buildings range from 72.2% to 100%.
To be sure, the pandemic did claim Neiman Marcus, the anchor of Hudson Yards’ tony mall, which filed for bankruptcy in May 2020. Still, the mall makes up about 3% of the overall development. The residential market is still recovering and hotels are struggling.
However, the district’s amenities, eco-friendly buildings with open floor plans, and proximity to the new Moynihan Train Hall and Pennsylvania Station, which is under renovation, have proved attractive to workers and companies, said Nora Wittstruck, an S&P analyst.
“There’s a lot of synergy around” Hudson Yards, said Wittstruck.
This article was provided by Bloomberg News.