Subsidy Sheet: Hudson Yards at 37% vacancy, but Hochul has taxpayers back new mega-offices next door at Penn Station
Governor Hochul’s plan to give developer/donor Vornado major tax breaks as part of her Penn Station revamp is a bad bet for taxpayers, suggests the New York Times.
It’s generally irrational public policy to give massive tax breaks to corporations that don’t need them for deals that will do little to boost the economy. So what does that make Governor Hochul’s plan for NYC and State taxpayers to subsidize ten million more feet of office space in post-pandemic Manhattan, when only 8% of NYC employees are in the office full-time, and office vacancy rates are at all-time highs – sheer folly? Madness?
The Times provides important context for the huge Hochul/Cuomo Penn Station development with some key stats about the adjacent Hudson Yards mega-complex and post-pandemic office space realities. Hudson Yards has been repeatedly cited as the model for the “value capture” scheme for Penn Station.
- About 37% of Hudson Yards office space is available for lease, “the highest rate in Midtown.” (Across Manhattan, the rate is 19%, still very high.)
- Hudson Yards’ developer, Related, is now trying to renegotiate its agreement with the MTA, pausing construction on several buildings, likely due to low occupancy rates and tenants seeking to offload their leases. A large number of leases are expected to lapse in the next several years, meaning that the current 95% occupancy figures for Hudson Yards are likely to change drastically.
- Manhattan already has 11% of all office space in the nation, according to the State Comptroller’s office.
- More than 70% of NYC office space leased pre-pandemic has yet to come up for renewal, according to an NYU/Columbia U study.
- Hudson Yards Station ridership is down 40%.
The Times piece wasn’t the only bad press for the Penn Station plan this week – Inside Hook also has a good write-up on other reasons not to move forward with the project: Going forward, white-collar employees expect to be in the office only half as often as they were pre-COVID, and most remote workers want to continue to work from home.
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Other stories from this week:
- Hochul is taking donations from board commissioners appointed by her administration, ignoring an executive order prohibiting the practice (NYT). The Governor’s office argues that the donations are kosher because the commissioners were appointed by her predecessor.
- City and State previews how the Legislature might revive 421-a.
- Micron says it hasn’t chosen a site for its next chip fab, despite submitting an application for tax breaks in Texas (Syracuse dot com, Times Union). Is Central New York is still in the running? Haven’t we seen this story before?
- Prism reports on why $123 million in subsidies for the Niagara Amazon warehouse is a bad deal.
- The American Economic Liberties Project will hold a workshop titled “Tools for Taking on the Corporate Subsidy Machine” on Wednesday, September 14th at 12pm. Register at the link.
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Fun fact: Penn Station used to look like this. A better future is possible! (Hat tip to Inside Hook.)
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If you got this from a friend, sign up here. Subsidy Sheet is written by Tom Speaker, Policy Analyst at Reinvent Albany, and edited by John Kaehny. Rachael Fauss also contributed writing this week.
Please send questions and tips to tom [at] reinventalbany.org. We look forward to hearing from you!