Retailers Are Betting Big on Hudson Yards Despite a Challenged New York Market

On a stretch of Manhattan’s far West Side, bordered by a railyard and the Jacob K. Javits Convention Center, there once lay a desolate industrial neighborhood of warehouses and parking spaces.

Now the 28-acre plot has become what has been dubbed the largest real estate project in New York since Rockefeller Center in the 1930s — with towering office buildings, multimillion-dollar condominiums, fine-dining restaurants and a 720,000-square-foot retail haven taking root in Related Cos.’ newly developed Hudson Yards. It’s a risky bet at a time when New York retail is under intense pressure.

Shops at Hudson Yards
The atrium of the Shops at Hudson Yards, which is set to open in March 2019.
CREDIT: Courtesy of Related Cos.

With more than 100 stores, The Shops at Hudson Yards officially opens on Friday, giving the city its first Neiman Marcus outpost while bringing to the area a mix of fast-fashion retailers including Zara and H&M, high-end footwear names like Stuart Weitzman and classic New York brands such as Kate Spade.

“It’s certainly a very high-profile project — not just because it’s a development, but from our perspective, it’s really about a brand-new neighborhood in New York City,” said Chris Heywood, EVP of global communications at NYC & Co. “What we like to remind people is that New York is one of the very few destinations in the world that continually evolves and reinvents itself time and time again. This is proof of that.”

As soon as this weekend, high-rolling international tourists, window-shopping locals and out-of-state visitors are expected to crowd the hallways of the seven-story glass-and-steel enclosure and its surrounding commercial spaces. In an era that has posed challenges for physical stores, Related Cos.’ newest and most ambitious project has the potential to either transform brick-and-mortal retail or collect dust in the off-the-beaten-path Midtown West.

Location, Location, Location

At the southernmost part of the High Line, passersby and sightseers formerly would find the Whitney Museum of American Art and an assembly of boutiques and galleries at the intersection of Washington and Gansevoort streets. At the northernmost point, they would only discover an empty swath of land overlooking the Hudson River.

But the Shops at Hudson Yards and its ancillary residential spaces have given rise to a new neighborhood — one that’s just blocks away from the highly trafficked Midtown areas of Times Square and Herald Square, accessible through the No. 7 subway station and the popular High Line park itself.

“When you can get a combination of a unique assortment of retailers that aren’t already present in the New York metro area — and you already have a high-traffic area in that people who walk on that promenade go over to visit — it offers people the opportunity to be able to see yet another shopping area that’s going to compete with the inner city and even some of the suburbs,” said Marshal Cohen, chief industry adviser of The NPD Group Inc.

“Now they won’t have to make a special trip out to New Jersey or Long Island to get to a Neiman Marcus,” he added. “The advantage is that those who don’t have the time or the transportation to get out to those locations now have the ability to do it.”

Photo courtesy of Related Oxford.
Hudson Yards will have a mix of office space, restaurants and retail.
CREDIT: Courtesy of Related Cos.

While it may not deter the city’s restless tourists, a number of locals and outer-borough residents have pointed out that the plaza’s location in the far West Side might be, well, too far. The No. 7 subway is the only direct line to the area, with the next-closest stop three avenues away at Penn Station.

Cohen, however, dismissed these obstacles. “This is New York. People find a way to get around, to get where they want to go,” he said. “For a destination location, it’s fine. That’s why the portfolio of stores is going to be more destination-oriented.”

It’s All in the Experience

At a time when an increasing number of retailers are throwing their resources behind digital platforms, Hudson Yards’ opening poses a one-of-a-kind challenge. Incoming retailers, and of course developers, are counting on the $25 billion project’s ability to not only lure in the area’s shoppers but also capture their attention long enough to keep them in stores and persuade them to buy.

The solution? Experiential draws, including a staggering 1,100-foot-high observation deck, a versatile performing arts theater called the Shed and the Thomas Heatherwick-designed “Vessel” structure — modern additions that certainly attract today’s Instagram-curating consumers and serve as a millennial paradise.

The "Vessel" structure, designed by Thomas Heatherwick.
The “Vessel” structure, designed by Thomas Heatherwick.
CREDIT: Courtesy of Related Cos.

Such experiences are also translated in stores. For its first-ever permanent location, Italian footwear brand M.Gemi is introducing a 1,450-square-foot space that features a charging station, lounge seating and a coffee bar where customers can enjoy an espresso while they shop.

“A big reason we were drawn to Hudson Yards was the potential mix of local shoppers and tourist traffic,” said Cheryl Kaplan, M.Gemi’s co-founder and president. “We’ve experimented with various retail concepts in NYC and realize that there is huge potential to capture the attention of both and build a very loyal customer base, so we are thrilled to be setting down permanent roots at Hudson Yards.”

Neiman Marcus, Hudson Yards.
Inside Neiman Marcus at Hudson Yards.
CREDIT: Courtesy of Neiman Marcus

As the anchor tenant, Neiman Marcus is betting even bigger on brick-and-mortar. Despite struggling with declining traffic in its department stores and heightened competition with online players, the retailer has secured an expansive three-story space in Hudson Yards, which will also house three restaurants including its signature Zodiac Room.

You Are Where You Shop

“What’s so fascinating about Hudson Yards is that it’s like a new city,” said Steven James, CEO of Douglas Elliman’s New York City brokerage. “It’s modern. It’s cutting-edge. It’s in an area that used to be downtrodden, and now they brought it back. This will be a bit of a destination for people — it’s like Oz.”

The Shops at Hudson Yards is certainly expected to become a major draw for the city’s tourism board, which NYC and Co.’s Heywood has dubbed the “crown jewel in 2019’s monumental year” for New York.

According to Heywood, 20 percent of the city’s total visitor volume comprises international visitors, who make up 50 percent of spending.

In 2017, the city recorded 62.8 million visitors, $44 billion in direct visitor spending and $66 billion in total economic impact — representing the biggest tourism economy in the country.

But it’s not just tourists who are the target. “The locals want new things to see and do, as well,” Heywood added. “We’ve got 8.6 million residents here … New Yorkers can sometimes forget that they’re living in this destination that’s ever-evolving and ever-changing.”

Experts say it will take time — following Hudson Yards’ March 15 public debut — to determine whether the development will eventually become one of the city’s tourist traps or a habitual visit for both locals and out-of-town visitors.

“After we get through the first couple of months and that honeymoon period is over, we’re really going to see who will be driving the traffic in the mall,” Cohen said. “After the first year, there really gets to be a consistency, and there’s the question of whether they’ll be able to survive.”

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