Wells Fargo has agreed to purchase the vacant space at 20 Hudson Yards in New York City from Neiman Marcus for $550 million. The space, totaling 400,000 square feet across three floors, will supplement the 500,000 square feet that Wells Fargo already occupies at neighboring 30 Hudson Yards. Neiman Marcus was expected to be the retail centerpiece of the $25 billion development, but declared bankruptcy in May 2020 due to the impact of online shopping, heavy debt, and the Covid-19 pandemic. The decision to purchase the space reflects a shift in Hudson Yards’ strategy, as the developer, Related Companies, seeks an office tenant rather than another retailer.
The closure of Neiman Marcus dealt a blow to Related Companies and its partner, Oxford Properties. The developer had initially believed that Hudson Yards’ office towers would primarily drive traffic to its retailers and luxury condominiums. However, the demand for office space remains strong, even as remote working has caused the broader office market to struggle. Three of the Hudson Yards’ office towers are fully occupied, and another tower is nearly full with tenants such as BlackRock and Facebook. This change in strategy aligns with Wells Fargo’s plans to expand its investment banking business, as it recently hired a new head of public affairs and aims to capitalize on the available space.
Wells Fargo’s acquisition of the vacant space at 20 Hudson Yards demonstrates the changing dynamics of New York City’s largest property development. Neiman Marcus’ bankruptcy and subsequent closure highlighted the challenges faced by retailers in the digital age and during the pandemic. Meanwhile, the demand for office space in prime locations like Hudson Yards has remained resilient. Related Companies’ decision to focus on attracting an office tenant reflects their recognition of this ongoing demand and the shifting needs of the market. For Wells Fargo, the expanded space presents an opportunity to further expand its investment banking business and strengthen its presence in the financial hub of New York City.