- New York's Hudson Yards development has been open since March.
- Some retailers are having success already.
- Developer Related says the mall is on pace to see more than 20 million annual visitors.
When the Hudson Yards megamall opened on the West Side of Manhattan roughly half a year ago, there were plenty of skeptics. And there still are.
The development, a sprawling 1 million square feet of retail space, is in many ways supposed to be the new blueprint for a shopping mall in the twenty-first century and age of Amazon. There's a floor dedicated to brands born on the internet, only one department store, plenty of restaurants, co-working space, interactive art exhibits lining the walls and room to lounge outdoors.
Everyone wants to know if Hudson Yards can succeed, at a time when more and more people are turning to the internet to do their shopping. And so far, early readings show the property looks to be trending in the right direction.
When it opened, the retail portion of Hudson Yards was about 85% leased, according to Webber Hudson, an executive vice president at Related Urban, a division within the developer, Related. By the end of 2019, it will be close to 95% leased, he said, surpassing expectations of hitting 90%.
"It's a tough retail market we are leasing into," Hudson said in an interview. "But the sales numbers [at Hudson Yards] are phenomenal. ... Of all the projects we are involved in, this is the most thrilling."
Hudson Yards is expected to see more than 20 million visitors in its first year being opened, he added. "About half our business is from Manhattan. ... And that's continuing to evolve as we settle from the opening sprint into a stride." For comparison, the Mall of America sees about 40 million people annually.
A few retailers have found success at Hudson Yards already.
B8ta, a space on the second floor that curates a rotating mix of brands of electronics and other knick-knacks, said this store is its highest performing to date.
"I absolutely [could] not have anticipated this, if I'm being candid," said b8ta co-founder and president Phillip Raub. "I had a sense [Hudson Yards] was a lot of hype," he added about his initial talks with Related before signing a deal to move in.
"We had a huge summer," he said. "We anticipate ... a huge holiday season. Once the weather turns for the worse."
B8ta is situated among a handful of e-commerce brands that are starting to open bricks-and-mortar stores. Hudson Yards calls it the "Floor of Discovery." Men's retailer Suitsupply is set to open in this area later this week, along with sustainable cashmere brand Naadam and apparel maker Faherty.
Also coming soon to the second floor is a space for kids called CAMP, which in addition to selling kids toys offers daily activities for kids such as crafts and storytelling, and plenty of room to run and play.
"We are very bullish on that second floor," Raub said. "It's intriguing to be around so many like-minded types of brands."
Meanwhile, the luxury shops at Hudson Yards have been another standout, thanks to a heavy influx of tourists and big spenders in nearby office towers.
Dior recently opened on the ground floor. Tiffany is set to open later this year. Watches of Switzerland says the store at Hudson Yards is one of its most trafficked.
"When we signed up we were preparing ourselves ... people said it would be a success but that it would take years," Watches of Switzerland CEO Brian Duffy said in an interview. "I think by anybody's estimation this is a success way beyond anyone could have expected. ... New Yorkers are coming."
To be sure, some think Triple Five Group's new American Dream mall, set to begin opening right across the river in New Jersey later this month, could hit Hudson Yards' traffic. But the retail portion of American Dream won't actually open up until later in 2020. And real estate analysts say American Dream will be more for people seeking out experiences, like riding one of the Nickelodeon theme park rides, versus buying a new blouse for work.
Another test will come when Nordstrom's first full-line department store for women opens in Manhattan on Oct. 24. That could pose a threat to the one department store at Hudson Yards, Neiman Marcus.
"Ultimately what is going to make [Hudson Yards] successful or not is ensuring from a merchandising perspective ... there are unique tenants that keep people coming back there," said Michael J. O'Neill, executive managing director of retail services at commercial real estate firm Cushman & Wakefield.
Back at Hudson Yards, in a bid to keep the surrounding area populated, a new Equinox gym and hotel is now open next door, with a SoulCycle studio downstairs, as well as a performing arts center called "The Shed," all drawing visitors of their own. The surrounding office space managed by Related continues to fill up. And Brookfield's Manhattan West development, which will include a retail component anchored by a Whole Foods grocery store, is still under construction next door.
"We were very deliberate in how we merchandised Hudson Yards," Related's Hudson said. "It was about having every price point. ... It gives you the opportunity six months down the road to see where your strengths are ... selecting and weeding out the weakness."