Leasing Surge Drops Office, Retail Vacancies in Hudson Square

NEW YORK CITY—A report authored by the Hudson Square Connection business improvement district states that a surge in the creative business sector has helped lower office and retail vacancies in the Hudson Square neighborhood of Manhattan.

The neighborhood's office vacancy rate dropped to 5% at the end of 2014, down from 5.6% in 2013. Hudson Square's retail vacancy rate dropped to 8.7%, down from 10.3% in 2013, the bid report states. The Hudson Square district is generally bounded by West Houston Street to the north, Canal Street to the south, 6th Avenue to the east and Greenwich Street to the west.

With 504,000 square feet of office leasing activity and 18,400 square feet of retail deals in 2014, the area saw new tech tenants move in, established media and advertising firms expand, and new dining and retail options enter the area.

“Hudson Square has become a magnet for tech, media, and advertising companies that want to be surrounded by other creative firms,” says HSC president Ellen Baer. “To accommodate this growing workforce and the incoming influx of residents, the BID is working to make Hudson Square a place for people. We're improving the ground floor environment and creating a sustainable neighborhood in an overlooked former industrial area on Manhattan's lower west side. As our business community keeps thriving and we keep enhancing the neighborhood, we expect vacancy rates to continue to drop.”

One of the largest office leases in Hudson Square in 2014 was global advertising firm Wieden + Kennedy's expansion to 69,750 square feet at 150 Varick St. In addition, several technology, advertising, media, and information firms signed new leases including Intent Media, Salesforce, and DigitalOcean. In addition, Cadillac made headlines with the relocation of its corporate headquarters from Detroit to the top two floors of 330 Hudson St.

New inventory continues to come online including luxury office space this year at 233 Spring St. and several mixed-use developments slated for completion in 2016.

The average asking rent for office space closed at almost $67 per square foot in the fourth quarter of 2014, a 15% increase year-over-year from 2013. Office rents ranged from approximately $40 per square foot in lower-end Class B office spaces to the upper $70s per square foot in the newly repositioned 101 Ave. of the Americas and similar Class A space, the HSC report notes.

New retail in the area included two new specialty coffee shops, La Colombe and Gregory's. New restaurants Union Bar & Kitchen and a soon-to-be-named eatery at 155 Ave. of the Americas are adding to the area's expanding dining sector.

Retail rents ranged from $132 per square foot for Union Bar & Kitchen to $200 per square for Gregory's Coffee. Entering 2015, there are five retail spaces on the market for more than 4,000 square feet, two of which are for more than 10,000 square feet.