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Wells Fargo Buys 400K SF at 20 Hudson Yards for $550M

Wells Fargo is buying the former Neiman Marcus space at Manhattan’s Hudson Yards—with plans to use it for an expansion of the bank’s office footprint in NYC. 

The deal for 400K SF at 20 Hudson Yards involves the bank acquiring floors five through seven for $550M. The sellers are Related Cos. and Oxford Properties, who will continue to own the balance of the 11-story building, which includes a shopping mall and restaurants.

The switch from a retail occupant to offices is another indication that the original strategy that Hudson Yards offices would drive traffic for retailers and luxury condos is not panning out as envisioned.

The retail and condo portions of Hudson Yards have underperformed while three Hudson Yards office towers, 10, 30 and 55—are now full, with a fourth tower approaching full occupancy, according to a report in The Financial Times.

In 2015, Wells Fargo purchased about 500K SF of office space at 30 Hudson Yards that the bank is using to house its securities, investment banking and capital markets business. The space at 20 Hudson Yards will facilitate an expansion of the investment banking footprint.

When it committed to a 50-year lease at 20 Hudson Yards in 2014, Neiman Marcus was supposed to be the retail centerpiece for the Hudson Yards development.

Neiman Marcus opened the luxury retail chain’s first store in Manhattan at 20 Hudson Yards in 2019, a 188K SF store filled with curated fashions, as well as several bars and restaurants, video screens and artwork.

A combination of pandemic lockdowns and a heavy debt load forced Neiman Marcus into bankruptcy in 2020. In July, 2020, the Dallas-based retailer shut its stores in Manhattan, Florida and Washington state.

Neiman Marcus Group, which also owns Bergdorf Goodman, was one of the highest-profile retailers to file for bankruptcy, but its time in bankruptcy protection was short-lived: the company filed for Chapter 11 in September 2020 and exited bankruptcy later that month.

In February 2023, the retailer announced a layoff of 5% of its workforce as part of a “strategic realignment to accelerate high-value luxury customer growth.”

In January, KKR nearly doubled its footprint at Related’s flagship tower at 30 Hudson Yards, absorbing 220K SF of office space that Meta Platforms declined to renew.

KKR already occupied more than 300K SF at 30 Hudson Yards, including the firm’s headquarters on the top 10 floors, when Meta announced in December that it was declining an option to renew its lease at 30 Hudson Yards and a smaller lease at 55 Hudson Yards when both leases expire in 2024.

In 2021, KKR bought a majority stake in the top of the new tower—including an observation deck known as The Edge that juts out of the top of the spire—for more than $500M.
Reprinted with permission from the Fri, 29 Sep 2023 05:03:31 EDT online edition of GlobeSt © 2023 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-256-2472 or reprints@alm.com.