The company behind the $20 billion Hudson Yards development on Manhattan's West Side expects economic activity there to eventually rival the gross domestic product of Iceland.
Crain's New York is reporting that the company behind the $20 billion Hudson Yards development on Manhattan's West Side expects economic activity there to eventually rival the gross domestic product of Iceland, according to an analysis released Monday.
Related Cos. is aiming to finish the project between West 30th and West 34th streets—which includes 10.4 million square feet of office space, eight residential buildings, a cultural center and retail—by 2025. A study commissioned by the developer indicated that total economic output of the companies projected to occupy Hudson Yards will contribute $18.9 billion to the city's gross domestic product. Iceland's gross domestic product is $15.3 billion.
"Ten years ago, New York City placed a very large bet on the development of Hudson Yards," the study said. "Three years into a 14-year construction program ... the bet is beginning to pay off."
The economic analysis was conducted by Manhattan consulting firm Appleseed, and was broken out into three sections including a variety of stats and predictions.
During the 14-year build-out period, for example, the report estimated that 2,767 construction jobs would be created annually. Once the complex is fully operational, Hudson Yards is expected to be home to 56,000 full-time employees earning an annual total of $9.8 billion, or an average of more than $175,000 per worker. The report also detailed the money that will go to the Metropolitan Transportation Authority, which owns the rail yards underneath a platform on which most of Hudson Yards will be built.
During the construction period, Related will fork over a total of $1.8 billion in lease payments to the MTA. Once the project is complete, those payments will be $89 million annually. The developer will also give the authority payments in lieu of taxes totaling $68 million each year that the city will use to pay down its portion of the debt service for the No. 7 train extension, which opened late last year but has since encountered water leaks.
Economist James Parrott of the Fiscal Policy Institute questioned several of the report's underlying assumptions. For one, he noted that many of the jobs and companies slated to move into Hudson Yards already exist in New York. And shifting economic activity to Hudson Yards from other places in the city would not actually boost the Big Apple's output. In addition, the report does not mention the value of property-tax breaks the city is doling out at Hudson Yards, which could amount to billions of dollars in foregone revenue.
“A more thorough report on the economic and fiscal impact of Hudson Yards would have tallied up the value of the property-tax breaks, and would have been more circumspect about taking credit for the personal income taxes paid by workers whose jobs were moved there from other locations in New York City,” Parrott said via email.
Many projections in the report are also contingent on a host of economic indicators in the city, including demand for Class A office space. Out of the 10.4 million square feet Related will have to lease up, so far it has locked in commitments from tenants for 4 million square feet.
Source: Crain's New York
The full report can be viewed below:
Hudson Yards Economic Impact Report by crainsnewyork