2 Manhattan West New Building- Thoughts? Forum

[Anonymous User]

What do people think about the new development in Hudson Yards slated to open in 2023? It looks very swanky of course, but I'm struggling to understand why the firms that have signed on would pay a premium for it?

Thus far it's Cravath, Clifford Chance, and Crowell Moring? Is it a sign of good financials, potential expansion, or is it some recruiting tool?

[Anonymous User]

Cravath makes sense, anything is better then the previous Hell’s Kitchen building. The other two were in older buildings in a good part of midtown / midtown east near 5th Ave. The Hudson yards location is probably a downgrade for them but the new buildings look great and the immediate area of Hudson yards is getting better. Not sure about client density in Hudson Yards but it’ll be hard to beat the financial services depth near Grand Central and up Park Ave. The commute has only a one block walk from the ACE or the 7, not bad. There only problem is Hudson Yards is an office park island or peninsula pinned in by the zombie garment district and Penn station to the east, highways, rail lines and Hell’s Kitchen to the north, highway and the Hudson to the west, but does have the awesome highline and a decent part of Chelsea to the south. But overall I’d say probably a good move for all (if it doesn’t crush profits too much) because moving into a new building in a new area is going to add some zest that assists in keeping people happy, especially Cravath, which has been hurting over the last decade relative to prior years.

[Anonymous User]

Great answer, thanks! Why would it crush profits ?

[Anonymous User]

Great answer, thanks! Why would it crush profits ?

Much more expensive rent per sqft compared to comparable midtown offices

[Sackboy]

Great answer, thanks! Why would it crush profits ?

The Hudson Yards buildings are notoriously expensive, even for Manhattan commercial real estate. They could be increasing rent 50%+ to move there. The OP is commenting that it's a good move as long as that increased rent isn't too expensive. That's all.

[Anonymous User]

Great answer, thanks! Why would it crush profits ?

The Hudson Yards buildings are notoriously expensive, even for Manhattan commercial real estate. They could be increasing rent 50%+ to move there. The OP is commenting that it's a good move as long as that increased rent isn't too expensive. That's all.

CSM is decreasing rent expense by downsizing from their outrageously large existing space fwiw

[Sackboy]

Great answer, thanks! Why would it crush profits ?

The Hudson Yards buildings are notoriously expensive, even for Manhattan commercial real estate. They could be increasing rent 50%+ to move there. The OP is commenting that it's a good move as long as that increased rent isn't too expensive. That's all.

CSM is decreasing rent expense by downsizing from their outrageously large existing space fwiw

Yep. You're seeing it all across the market. Lots of firms are decreasing their office footprints by up to 50% by moving to standard office sizes (sorry partners who had massive corner offices), embracing hoteling/remote attorneys without offices, and eliminating the unused secretary space from their old leases that they inked 15 years ago before attorney to secretary ratios skyrocketed.

[Anonymous User]

Were these leases signed (and rents locked in) pre-COVID or post-COVID?

[Anonymous User]

Were these leases signed (and rents locked in) pre-COVID or post-COVID?

Not sure it makes a difference for the top-dollar new buildings. There has been a flight to quality in manhattan commercial real estate (so says FT, WSJ, etc) so the prices for the new developments in Hudson Yards and One Vanderbilt never dropped. Speaking of One Vanderbilt, is anyone here from McDermott or GT who can talk about what it's like being a tenant? I heard the showers are great.

[charles117]

csm's existing office layout is grossly inefficient

[Anonymous User]

This table is c. 2019. Is the knock on CSM that they had too much sq. ft. relative to headcount? I know CSM is a leaner/smaller firm, but it looks like S&C has far and away the most space.

From this chart it looks like Skadden may have gotten the unfortunate combo of huge (pre covid) footprint plus expensive HY rents.

[Anonymous User]

This table is c. 2019. Is the knock on CSM that they had too much sq. ft. relative to headcount? I know CSM is a leaner/smaller firm, but it looks like S&C has far and away the most space.

From this chart it looks like Skadden may have gotten the unfortunate combo of huge (pre covid) footprint plus expensive HY rents.

Cravath is much smaller than the firms with larger footprints. That said, this seems to list them at 2 Manhattan West rather than their existing 8th Avenue address so presumably already reflects the downsizing (even though they hadn't moved yet in 2019 - confusing).

S&C gets a big discount for being downtown, so their space is much cheaper than the other firms near the top of the list.

[Anonymous User]

This table is c. 2019. Is the knock on CSM that they had too much sq. ft. relative to headcount? I know CSM is a leaner/smaller firm, but it looks like S&C has far and away the most space.

From this chart it looks like Skadden may have gotten the unfortunate combo of huge (pre covid) footprint plus expensive HY rents.

Cravath is much smaller than the firms with larger footprints. That said, this seems to list them at 2 Manhattan West rather than their existing 8th Avenue address so presumably already reflects the downsizing (even though they hadn't moved yet in 2019 - confusing).

S&C gets a big discount for being downtown, so their space is much cheaper than the other firms near the top of the list.

My understanding is that S&C “owns” their building so would presumably be paying a mortgage and associated expenses rather than a lease, and maybe the ACLU and fraternal order of police (?) tenants in the building help out with expenses. I’m curious if Sullcrom applies the tenant revenue to their total revenue for AMLAW purposes because they are super consistent as number 2 in RPL behind Wachtell despite having the same organizational structure and clients as peer firms that swing around in RPL. Wachtell presumably leads in RPL due to leaner staffing and a narrow high dollar M&A focus but SullCrom always holds onto number 2 in RPL despite staffing, clients, and deal totals roughly on par with a few other firms.

[Anonymous User]

[. . . ] I’m curious if Sullcrom applies the tenant revenue to their total revenue for AMLAW purposes because they are super consistent as number 2 in RPL behind Wachtell despite having the same organizational structure and clients as peer firms that swing around in RPL. Wachtell presumably leads in RPL due to leaner staffing and a narrow high dollar M&A focus but SullCrom always holds onto number 2 in RPL despite staffing, clients, and deal totals roughly on par with a few other firms.

Pretty sure S&C’s rates are higher than peer firms. I can’t be fussed but if you checked FTX bankruptcy fee applications vs. Purdue and Revlon, I believe that would be borne out.

[Anonymous User]

[. . . ] I’m curious if Sullcrom applies the tenant revenue to their total revenue for AMLAW purposes because they are super consistent as number 2 in RPL behind Wachtell despite having the same organizational structure and clients as peer firms that swing around in RPL. Wachtell presumably leads in RPL due to leaner staffing and a narrow high dollar M&A focus but SullCrom always holds onto number 2 in RPL despite staffing, clients, and deal totals roughly on par with a few other firms.

Pretty sure S&C’s rates are higher than peer firms. I can’t be fussed but if you checked FTX bankruptcy fee applications vs. Purdue and Revlon, I believe that would be borne out.

I’d be surprised if they could charge consistently higher rates than Skadden, Cravath, STB, DPW, Debevoise, etc, across tens of thousands of transactions over twenty years. If it does come down to rates, maybe they have a higher proportion of top dollar M&A but I’m still suspicious because the PPL of S&C is never as consistently at the top as the RPL. Was mainly curious about the AMLAW accounting, though.