On March 14, 2019, Hudson Yards will fully open its eastern portion. Twenty-five restaurants will fire up the stoves. More than 100 stores will fling open their doors. Marquee companies like BlackRock, Wells Fargo, and HBO will occupy office space. An entirely new neighborhood will spring into existence in what seems like an instant.
In reality, though, it’s taken mega-developer Related Companies over a decade to get to this moment. In that time, Hudson Yards — the stagnant rail yard area between 30th and 34th streets and 10th and 12th avenues — has turned into a modern adult playground of luxury retailers and restaurants, park space, and public events that have come to fruition through the vision of Related Urban CEO Kenneth Himmel.
Himmel has spent the last five years building what he sees as the ultimate dining neighborhood, from a Thomas Keller restaurant all the way down to a Shake Shack, and his vision for the future is clear: A sleek, Panem-like metropolis full of businesses that cater to the upper crust. No restaurant opening here is an accident — here’s how Himmel made his picks.
The Keller effect
According to Himmel, he knew what he wanted from the very beginning, with slots in mind of what kinds of restaurants he wanted to fill, such as a salad shop, a coffee bar, a grocer, a wine bar — all the concepts one would see in any neighborhood. The pièce de résistance was a fifth-floor collection of restaurants and fast-casual stalls, essentially a food court on steroids meant to draw people through the retail portion up to the food.
To build out his vision, the first step Himmel needed to take was securing the big-name draws, so he called in his buddy Thomas Keller. Keller’s restaurants Per Se and Bouchon Bakery in Time Warner Center pull in $24 million and $7 million a year respectively, according to Himmel, and Himmel saw that as proof positive of how restaurants on upper floors of a shopping center can work. Related calls TWC its “crown jewel” development, so the company is following the same playbook at Hudson Yards.
“Knowing [Keller had] given the project the seal of approval, it’s a comfort factor. Because when you start to present to a restaurateur you’re going to the fourth or fifth level of a vertical shopping center, that’s not something these people are accustomed to,” Himmel says. “So he could sort of take the edge off it by saying the way [we] put a project together and feed the audience into the project.”
Everything is designed to pull people in and up: the escalators, the open floor plan, Neiman Marcus starting on level five, the Keller and Estiatorio Milos flagships on five and six. Restaurants on higher floors are common in other countries, especially in Asia, but the format has not quite caught on in the United States — yet, if Himmel has his way. He says that at Time Warner Center, 90 percent of people use the escalator over the elevator to get to the third-floor restaurants, forcing them to go through retail territory. He employed the same model here, and says that Per Se and Bouchon’s success on upper levels was key in convincing restaurateurs to sign on at Hudson Yards.
As Himmel planned, once Keller was on board, others fell in line from there, though he was not nearly the only draw. Momofuku titan David Chang says that the appeal of opening in a brand-new building was high, while Belcampo Meat Co. co-founder and CEO Anya Fernald cited the promised high volume. Other entrants include the umpteenth Shake Shack, an entire market dedicated to the Spanish food of humanitarian chef José Andrés, fast-casual pizza, fast-casual salad, and fast-casual avocado toast.
The Related cash flow web
As calculated by Himmel, all the restaurants are highly established names with reputations that precede them, and none compete with the other. Though Himmel calls Keller and Greek restaurant Estiatorio Milos the most significant, other very noteworthy entrants are Michael Lomonaco’s rotisserie Hudson Yards Grill, Momofuku’s Korean-leaning restaurant and outpost of fried chicken chain Fuku, an Equinox hotel, fast-casual pizzeria &pizza, and Australian-style coffee shop Bluestone Lane. The company has also been in talks with sweets shop Milk Bar, though that deal is not finalized. But these companies also have something else in common: They’re all brands that Related, or Related-associated people, have some sort of ownership stake in.
Started in the ’70s as an affordable housing developer, Related Companies now encompasses dozens of companies, from luxury housing to private investment to SoulCycle, valued at $50 billion. It’s a tangled web that Related weaves at Hudson Yards: Owned by Stephen Ross, Related has many subsidiary businesses, one being a private investment firm called RSE Ventures. RSE holds a significant minority stake in Momofuku, Milk Bar, &pizza, and Bluestone Lane. Ross is also an owner of Equinox, while Himmel is an owner of Hudson Yards Grill. That means at least seven of the 25 available, valuable spaces directly funnel back to Related — a given, according to Himmel.
“Of course we are [including them],” Himmel says. “Ross couldn’t do a project without bringing all his brands over here, right?”
What didn’t make the cut
What’s not included, though, are any female-owned, full-service restaurants. Himmel blames it on a lack of resources on the chefs’ part. After getting close to signing two unnamed female chefs, he says the deals fell through because the chefs simply could not get funding — and Related was not willing to put up enough money. With leases and build-out making costs $1,000 per square foot compared to a more average $200 or $300 per square foot in NYC, according to Himmel, that means chefs would need at least $2 million at the outset.
“We went as far as putting up 50 percent of all money to do it. But they just couldn’t find the other money. We would have had to have become their full partner and the landlord, and it creates too many conflicts,” he says.
But the company did put up money for the more “experienced” names, with Himmel saying that “especially for people who really are experienced and have great brands,” Related was able to provide equity in the form of a tenant allowance up to $3 million for some build-outs.
What Himmel wanted, Himmel got done. “Believe it or not, 75 percent of the categories I wanted and the people I wanted to go after, I got,” he says.
A destination in the making?
It’s a different approach than how other developers are curating somewhat similar markets in the city. On a definitively smaller scale, Prusik Group is one of the companies behind the upcoming Essex Crossing development on the Lower East Side, encompassing nine buildings with over 1,000 new residences (with 50 percent comprised of affordable housing to Hudson Yards’ 10 percent) and more than 850,000 square feet of office and retail space.
There, Prusik principal Rohan Mehra offered incentives — like not charging common area maintenance fees; handling permits for the buildouts; adjusting rents based on forecasted profits; and in some limited cases, loaning capital to businesses — to ensure a diverse offering that included immigrant-, people of color-, and woman-owned small businesses.
But with Related promising 30 million people a year visiting Hudson Yards, Mehra says Related had “to do different things” in order to get people to go to this previously unoccupied area. Unlike the already developed Lower East Side, Hudson Yards needs to hit destination status from the get-go. Related needs its newer, bigger, shinier, and more profitable crown jewel, with big names that already have huge followings.
“With the amount of risk we’re taking and the investment we’re making, and the caliber of the people who are living around us? People who are moving in here as office occupants and residents want to know that great brands have committed to the project,” Himmel says. “That’s a seal of approval.”