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Wells Fargo has agreed to buy Neiman Marcus’s vacant space at 20 Hudson Yards for $550mn in a deal that confirms the changing fortunes of one of New York City’s largest property developments.
The space totals 400,000 square feet spread over three floors, and will supplement the 500,000 sq ft Wells Fargo already occupies at neighbouring 30 Hudson Yards.
When it committed to a 50-year lease in 2014, Neiman was supposed to be the retail centrepiece for the $25bn mixed-use development on the far west side of Manhattan.
But the high-end department store declared bankruptcy in May 2020, brought low by online shopping, a heavy debt load and the Covid-19 pandemic.
In a blow to the Related Companies, Hudson Yards’ principal developer, and its partner, Oxford Properties, it opted to close the store that July — little more than a year after opening its doors with a glitzy, champagne-soaked party.
Jeff Blau, Related’s chief executive, had indicated in recent months that he would seek an office tenant, as opposed to another retailer, to fill the space. That approach reflected the developer’s belief that there was still ample demand for the newest and best-equipped office towers in New York City even as remote working has pushed the broader office market into crisis.
It also marked a shift from Related’s original thesis that Hudson Yards’ offices would primarily serve to drive traffic for its retailers and luxury condominiums. Instead, those categories have underperformed while three Hudson Yards office towers — 10, 30 and 55 — are now full. Meanwhile, another, which counts BlackRock and Facebook as tenants, is nearly full.
For Wells Fargo, the expanded space may come in handy as it embarks on its latest effort to build out its investment banking business. Tim O’Hara, who joined Wells from BlackRock last year and is based in New York, now leads its investment bank. Last week, Wells announced that it had hired Thomas Nides, a former top executive at Morgan Stanley, to be its new head of public affairs.
Related and Wells Fargo declined to comment.
Source: Financial Times