Transcription
Hudson Yards was supposed to be the future. A $25 billion private real estate development on the far west side of Manhattan, built over active rail yards, announced to the world as the largest private real estate development in American history. It was going to redefine New York skyline and anchor an entirely new neighborhood. Instead, it's become one of the most expensive cautionary tales in urban planning history. This is the story of New York City's $25 billion Hudson Yards and its collapse.
What Hudson Yards was supposed to be. The pitch for Hudson Yards, as it was presented to New York City and to the world, was ambitious in the specific way that only very large amounts of money can sustain. The development, led by Related Companies and Oxford Properties Group, was planned for a 28-acre site on Manhattan's far west side, between 30th and 34th streets west of 10th Avenue. The former site of a vast open-air rail yard belonging to the Metropolitan Transportation Authority, still operational and requiring the entire development to be built on an enormous elevated platform constructed over the functioning tracks below. The cost of that platform alone, approximately $3 billion, was just one component of a project budget that eventually reached and exceeded $25 billion across the entire development, making it the largest private real estate development in United States history.
The plans announced in the early 2000s called for 18 million square feet of commercial and residential space across a phased development. The completed first phase would include four commercial office towers, luxury residential buildings, a hotel, a seven-story retail mall called The Shops at Hudson Yards, a public performance space called the Shed, the observation deck called Edge, and most visibly, an interactive climbing structure called Vessel, designed by British designer Thomas Heatherwick. Phase two would extend the development further west and include additional commercial and residential buildings.
The marketing language at the time described Hudson Yards as a city within a city, a new neighborhood that would generate its own economic gravity and transform the far west side from an underutilized industrial fringe into a premier Manhattan address. Related Companies Chairman Stephen Ross repeatedly described it as a once-in-a-generation opportunity to reshape New York. And the early tenant commitments, including major financial services firms, luxury retailers, and corporate headquarters, seemed to validate the vision. It was at the time of its public opening in March 2019, celebrated as a triumph of American private enterprise and urban ambition. That celebration aged quickly.
The tax break problem nobody talked about. The largest private real estate development in American history framing was technically accurate and also somewhat misleading because Hudson Yards was not built purely on private capital. The public subsidy that underwrote the project was substantial, largely concealed within the complexity of the financing structure, and is only now receiving the scrutiny it warranted from the very beginning. The primary mechanism was the Hudson Yards Infrastructure Corporation, a special purpose entity created by New York City to issue bonds and finance the public infrastructure necessary to make the development viable. The most significant of these was the extension of the number seven subway line to a new station at 34th Street and 11th Avenue, which opened in September 2015 and cost approximately $2.4 billion. Without a subway connection, the far west side location, which had no existing mass transit access, could never have attracted the scale of tenancy that the financial model required. The subway extension was, effectively, a precondition of the entire development. And it was funded publicly.
The connection to the 421-a property tax exemption program, a mechanism originally created in the 1970s to encourage housing construction in blighted parts of New York City, now operating in a very different context, meant that residential buildings in Hudson Yards received significant property tax abatements that reduced their contribution to the city's tax base for extended periods. The Independent Budget Office of New York City estimated in a 2018 analysis that the total public subsidy supporting Hudson Yards, including infrastructure investment, tax expenditures, and other public contributions calculated over a 30-year period, exceeded $6 billion. $6 billion from New York City taxpayers directed toward what the marketing consistently described as a triumph of private enterprise and market forces.
This is not an unusual arrangement in large-scale urban development. Public infrastructure investment to support private development is common in cities across the country. What is unusual is the scale of the subsidy relative to the public benefit received. In exchange for $6 billion in public investment and foregone tax revenue, New York City got a luxury district that serves a narrow segment of the population, minimal affordable housing, office space that primarily houses corporations that were already located in Manhattan, and an observation deck that charges $50 a ticket. As City University of New York urban planning professor Tom Angotti observed, Hudson Yards is the most expensive public subsidy in New York history dressed up as private development. The public paid for the infrastructure that made a luxury district possible, and the public got very little in return. The comparison to what $6 billion could have funded in affordable housing, school construction, or public transit maintenance is not a hypothetical. It is the straightforward arithmetic of opportunity cost.
The Vessel disaster. The most immediately visible symbol of Hudson Yards problems is the Vessel, and the story of the Vessel is one of those situations where the problems compounded in ways that nobody fully anticipated, but that in retrospect seem to have been sitting in the design from the beginning. The Vessel is a 150-ft tall honeycomb-shaped interactive climbing structure consisting of 154 interlocking flights of stairs, 80 landings, and 2,500 steps designed by Thomas Heatherwick Studio. The design was chosen to provide a distinctive landmark and a free public amenity, something for the people of New York to engage with that wasn't simply a shopping mall or an office building. It cost approximately $200 million to construct, was described by Heatherwick as a social vessel, and a gift to the public, and opened on March 15th, 2019 as the centerpiece of Hudson Yards public opening. Related Companies chairman Stephen Ross compared its significance to the Eiffel Tower.
The Eiffel Tower comparison aged poorly within 2 years. In April 2021, the Vessel was closed after a 19-year-old man died by suicide by jumping from the structure. It was the third suicide death from the Vessel. Two had occurred in the months before this one. And it prompted Related Companies to close it while evaluating modifications. The structure was briefly reopened with new visitor requirements, including a requirement that visitors be accompanied by at least one other person. A fourth person died in July 2021 after that modified reopening. The Vessel was closed again. The problem was architectural and fundamental. The structure, designed as an open-air climbing experience with unobstructed views of the surrounding city, had no physical barriers between the stairways and a drop of up to 150 ft. The openness was the aesthetic point. That same openness made the structure potentially lethal for anyone experiencing a suicidal crisis. The debate about what to do, a $200 million monument to a problem nobody had designed around.
In January 2023, Related Companies announced the Vessel would reopen exclusively for guided group tours, eliminating the individual free access model that had been central to its purpose as a public amenity. The structure's role as a freely accessible public space, the core of its social rationale and the justification for its cost, was effectively abandoned. It is now a ticketed group experience that must be reserved in advance. The Vessel is not Hudson Yards' only problem, but it is its most visible and most publicized one, and it captures something essential about the development's relationship to its own ambitions. The gap between what was promised and what was delivered has been consistent, expensive, and hard to ignore.
The Shops at Hudson Yards and the retail apocalypse. The Shops at Hudson Yards is a seven-story luxury retail complex anchored by Neiman Marcus, and it opened in March 2019 at what turned out to be the worst possible moment in the modern history of American luxury brick-and-mortar retail. The timing is almost uncomfortably perfect as a case study in misreading a trend. By 2019, the secular decline of physical retail, driven by e-commerce, driven by changing consumer behavior, driven by the consolidation and bankruptcy wave rolling through major department stores, was well documented and universally discussed in retail and real estate circles. And yet, Related Companies and Oxford Properties opened a new luxury department store-anchored mall at a location with essentially no established residential neighborhood around it, no street-level foot traffic from any existing community, and a specific clientele that would need to make a deliberate transit or car journey to 30th Street and 10th Avenue to access it. The location has no passing trade. Everyone who arrives has to mean to be there.
Neiman Marcus, which had been in financial difficulty for some time prior to the opening, filed for bankruptcy in May 2020, having been open at Hudson Yards for only approximately 14 months as COVID-19 shut the retail sector entirely. Neiman Marcus exited its Hudson Yards space as part of its bankruptcy reorganization. The flagship tenant of the retail component of a $25 billion development was gone before it had completed two years of operation. The Shops at Hudson Yards subsequently went through retenanting efforts, replacing luxury fashion retailers with experiential concepts and other alternatives to the conventional luxury retail model. This is the playbook that struggling malls across America have been running with variable success for a decade. At Hudson Yards, the process of running this playbook was occurring in a building that had been designed, built, and marketed specifically for the luxury retail experience it could no longer provide. The Shops, as of the mid-2020s, remain occupied but far below the vision and the footfall projections that justified the investment.
The remote work problem. Hudson Yards was designed fundamentally as an office district. The commercial office towers were the core economic engine of the entire project. The long-term leases that would generate revenue to service the development's debt, justify the construction costs, and validate the financial model that had persuaded investors, lenders, and New York City government to commit to the project. Those towers required major corporate tenants. Those tenants required their employees to come to work in those buildings. Those employees, thousands of them, every weekday were expected to be the animating population of Hudson Yards, filling the retail spaces, eating at the restaurants, using the public amenities, and creating the street-level activity that would make the city within a city claim something other than marketing copy. Then the pandemic rearranged all of those assumptions.
The shift to remote and hybrid work that accelerated through 2020 and 2021 and has persisted in modified form ever since struck Hudson Yards with particular severity because of what the development lacks. Established Manhattan neighborhoods, Midtown, the Financial District, Chelsea, the West Village have decades of residential density, independent businesses, restaurants, bars, and street life that predate the office towers and exist independently of them. When office occupancy drops, those neighborhoods thin out but retain baseline activity from residents and from businesses that serve needs beyond the 9-to-5. Hudson Yards has almost none of that. The residential component is luxury condominiums, whose residents are not numerous enough to activate the neighborhood. The retail is aimed at shoppers, not at residents who need a dry cleaner or a corner store. The streets of Hudson Yards on a Wednesday at noon, without office workers, are as quiet as a business park in the suburbs on a weekend.
30 Hudson Yards, the 1,268-ft office tower housing KKR, Wells Fargo, and the Edge Observation Deck, and 10 Hudson Yards, anchoring companies including Coach, L'Oreal, and SAP, maintained signed leases, but tenants shifted to hybrid schedules that meant the physical offices were occupied at a fraction of their capacity on most days. 50 Hudson Yards, a 58-story tower that opened in 2022 and houses BlackRock's global headquarters, was delivered into a market where the utilization assumptions that had underpinned the development's financial modeling no longer applied. Related Companies and its lenders understood that office demand would eventually recover towards something resembling pre-pandemic norms. What they could not have fully accounted for is that the recovery would be partial, hybrid, and structural rather than temporary. And that Hudson Yards, with its complete dependence on office activity to generate neighborhood life, would absorb that partial recovery worse than almost any other Manhattan district.
The 35 Hudson Yards problem. 35 Hudson Yards was supposed to be the residential and hospitality crown of the first phase, a 1,009-ft mixed-use tower combining the Equinox Hotel and Equinox Fitness Club flagship and luxury condominium residences that were at the time of their launch being marketed at among the highest per square foot prices ever offered in New York City. The Equinox Hotel opened in September 2019 and was positioned as a luxury wellness-oriented product unlike any other hotel in the market. Room rates started at approximately $700 per night. The hotel concept centered on physical performance and wellness as the organizing principle of the guest experience. An Equinox Fitness Club in the building, sleep optimization programming, nutrition services, and physical training as core amenities rather than afterthoughts. The concept was genuinely novel and received considerable attention from the luxury travel press which reviewed it favorably. The pandemic closed it along with everything else.
When it reopened, the Equinox Hotel was operating in a changed luxury travel market. One that had redistributed some of its pre-pandemic demand toward leisure and resort destinations while business travel and convention traffic recovered more slowly. The hotel has continued to operate and to receive generally positive reviews from guests who make the deliberate choice to stay there. It is a legitimate product. It is simply not the kind of hotel that benefits from Hudson Yards foot traffic because Hudson Yards doesn't have the kind of foot traffic that fills hotel lobbies. The residential condominiums at 35 Hudson Yards present the more troubling long-term picture. Units were priced starting at several million dollars for two-bedroom residences and reaching $32 million and above for penthouse listings. These prices were predicated on the assumption that the Hudson Yards address would carry a premium comparable to established Manhattan luxury addresses, Central Park South, Billionaires' Row, along 57th Street, the most coveted blocks of the West Village. That premium never fully materialized. Property tracking data published by real estate analysts over the years following the building's 2019 launch showed that a significant proportion of units remained unsold considerably longer than projections anticipated. Some were quietly repriced downward. The luxury condominium market softened citywide during this period, which affected all luxury addresses, but Hudson Yards, as a brand new neighborhood with no established cachet, no history, and no organic sense of place, was more exposed to that softening than addresses where the neighborhood itself is part of what buyers are purchasing.
The culture problem. The arts center at the northern end of the first phase development, housed in a building with a distinctive retractable outer shell that can extend over the adjacent plaza to create additional covered performance and event space, was positioned as the cultural anchor that would give Hudson Yards something beyond its commercial function. Related Companies understood that a pure office and retail development would be difficult to frame as a neighborhood, and The Shed was the institution designed to address that problem, to give the development a soul. The Shed is, to be clear, a genuinely interesting institution. Its programming since opening has included ambitious and well-regarded work across performance, visual art, and experimental formats that few New York venues are physically or financially equipped to support. The retractable shell, The McCourt, as the covered plaza is called, creates a large-scale event space that genuinely does not exist elsewhere in the city. The building was designed by Diller Scofidio plus Renfro with Rockwell Group and is architecturally distinctive in a way that few buildings at Hudson Yards are. But The Shed has struggled financially in ways that raise real questions about whether it was conceived as a viable independent cultural institution or primarily as an amenity for a real estate development. A culture-shaped object that allowed Related Companies to put "art center" in the marketing materials without having built an institution that could sustain itself. The Shed is a nonprofit that relies on a combination of earned revenue, private philanthropy, and public funding from New York City. Its lease arrangement with Related Companies was structured to make the space economically feasible for a nonprofit cultural institution, meaning Related Companies is providing below-market terms. In 2022, The Shed went through significant financial restructuring, including layoffs and reduced programming, as it worked to bring its cost structure into alignment with its revenue capacity.
The deeper cultural problem at Hudson Yards is not specific to The Shed. It is experiential and spatial. The streets of Hudson Yards are clean, corporate, and almost always empty. The public plazas are well-designed and unoccupied. The buildings are architecturally ambitious and cold. There is no coffee shop where a regular comes every morning, no bar that has been in the same spot for 20 years, no bodega, no laundromat, no street vendor. There are no accidents and no history. Architecture critic Michael Kimmelman of The New York Times, whose coverage of Hudson Yards was consistently probing, described it as a gated community for the very rich masquerading as a neighborhood. Pointing to the fundamental contradiction between the development's relentless marketing as a new New York neighborhood and its actual character as a privately controlled real estate project with carefully managed public spaces that are technically public but functionally serve a narrow economic tier. That critique identifies something real. A neighborhood is not something a corporation builds in a decade. It is something that accumulates over generations of human choices, accidents, adaptations, migrations, and compromises. Hudson Yards tried to buy a neighborhood with $25 billion. What it built was a very expensive development.
The broader context, what it means for urban development. Hudson Yards exists within a broader and genuinely important national conversation about how cities develop, who that development serves, and what the appropriate relationship between public subsidy and private profit should be. The far west side of Manhattan was underdeveloped relative to its potential. And the development of a mixed-use district on those railyards was always a reasonable urban planning objective. The number seven subway line extension was a legitimate infrastructure investment regardless of what happened above it. New commercial and residential development on the far west side was going to happen eventually in some form because the land and location were too valuable in a city like New York for that corridor to remain a railyard indefinitely. The question was always about form, priorities, and accountability. Whether Hudson Yards, the specific project that happened, was the right vehicle for the public investment it required. And whether the people of New York City were getting appropriate value for the $6 billion in public subsidy directed toward it. The evidence, viewed fairly, suggests they largely were not. A development that produced minimal affordable housing, that created a hermetically sealed luxury environment with awkward connections to the surrounding neighborhoods of Hell's Kitchen, Chelsea, and the High Line corridor, and that has remained visibly underutilized since its opening is not a strong advertisement for the model.
The High Line, the elevated rail park that runs from Gansevoort Street in the Meatpacking District north to 34th Street, terminating at Hudson Yards, is its own instructive context. The High Line was funded primarily with public money and private philanthropy, conceived and advocated for by a nonprofit organization, and built by the city for public use. In transforming a derelict elevated freight rail line into New York's most beloved public spaces, it generated billions of dollars in real estate value for the private owners of property along its route. That value capture, public investment producing private windfall, is the logic that Hudson Yards extended and amplified to its most extreme form. Urban planner and author Samuel Stein, who has written extensively about real estate's relationship to public policy, described the dynamic plainly. Hudson Yards is what happens when a city stops thinking about land as a public resource and starts thinking about it purely as a vehicle for private wealth creation.
The $25 billion figure most associated with Hudson Yards is private investment. The $6 billion figure that appears less frequently in the coverage is the public cost. The neighborhood that was promised in exchange for that public cost has not materialized. The state of Hudson Yards today, as of the mid-2020s, is not a failure in every sense, and it is worth being precise about what has and hasn't worked. The office towers have tenants with long-term leases. 10 Hudson Yards, 30 Hudson Yards, and 55 Hudson Yards are occupied by major corporations: Coach, L'Oreal, SAP, KKR, Wells Fargo, CNN, and others. The leases exist. The buildings are built. The platform is there. BlackRock's global headquarters at 50 Hudson Yards represents a genuine corporate anchor. The Equinox Hotel operates at 35 Hudson Yards, has received good reviews from travelers who make the trip, and continues to function as a genuinely distinctive luxury hospitality product. The Edge observation deck is open and draws visitors, charging $36 to $50 for admission, and competing in a crowded New York City observation deck market against One World Observatory and the Top of the Rock.
What Hudson Yards is not, and has not been since the day it opened, is the transformative neighborhood success story that Stephen Ross and Related Companies spent years promising. The word neighborhood has largely disappeared from the development's marketing materials, replaced by more modest characterizations of the area as a business district and destination. The streets of Hudson Yards, on any given weekday afternoon, are quieter than the streets of any established Manhattan neighborhood at any time of day or evening. Phase two of the development, which was supposed to extend the project further west across 10th Avenue to 11th Avenue, adding another major residential tower, additional office space, and a connection to the Hudson River waterfront has been indefinitely paused. Related Companies announced in 2023 that the 66 Hudson Boulevard East Tower, a key phase two component, would not proceed on its original timeline. Rising interest rates, reduced appetite for commercial office investment, the softened luxury residential market in the post-pandemic period, and the broader challenges of the commercial real estate sector all made the economics of phase two financing untenable in the near term. The platform over the railyards, the most extraordinary engineering feat of the entire project, sits there. The towers stand, but roughly half of what was planned remains unbuilt, indefinitely deferred, dependent on market conditions and financing environments that remain unfavorable.
Hudson Yards. Phase one is complete. Hudson Yards, the neighborhood is not. Hudson Yards spent $25 billion and extracted $6 billion more from the public to prove that you cannot manufacture a neighborhood. You can build towers and a shopping complex and an observation deck and a very expensive climbing structure that now requires a guided tour to access. You can extend a subway line to a corner where almost nobody lived. You can get the architectural renderings right, the press releases right, the opening weekend photo opportunities exactly right. What you cannot do with any amount of money or any scale of construction is create the thing that makes a neighborhood real. The decades of accumulated human presence, the mix of people and incomes and uses and histories and ordinary contradictions that make a place feel like somewhere specific, rather than something built to perform somewhere specific. Hudson Yards performs Manhattan without having any of the qualities that make Manhattan Manhattan. The office tenants are there, the hotel runs, some of the apartments are occupied, the observation deck is open. Phase two is paused. The Vessel is on guided tours. Neiman Marcus is gone. The streets are clean and mostly quiet. That is New York City's $25 billion Hudson Yards and its collapse. Not as an engineering project, which was genuinely extraordinary, and not as a collection of individual buildings, some of which are excellent, but as the idea that you can buy a neighborhood into existence if you spend enough money. You cannot. The history of cities is proof of that, and Hudson Yards is one more example written very large and at very high cost. Hit that like button and subscribe if this one was worth your time. More of this coming.