Tishman Speyer Seeks $92M Tax Break for Hudson Yards Tower

Tishman Speyer is asking New York City for a $92.2 million tax break to build its next Hudson Yards office tower, a 49-story, 1.3 million-square-foot project at 99 Hudson Boulevard, according to an application before the city’s economic development agencies reported by Bisnow.

Why it matters

A marquee developer proposing a marquee tower on a marquee site, in the strongest office submarket in the country, is telling the city the project does not pencil without public help. The application, before the New York City Industrial Development Agency and NYCEDC, seeks a 23-year Payment in Lieu of Taxes deal ahead of a September 15 public hearing. If ground-up Class A office in Hudson Yards needs a nine-figure abatement to work, developers underwriting new office anywhere with weaker fundamentals, including South Florida, should treat public incentives as a line item to secure up front rather than a bonus to chase later.

The numbers

The $92.2 million in foregone tax revenue works out to roughly $71 per square foot of the tower’s 1.3 million square feet. Tishman Speyer put the total project cost at $2.7 billion, with $1.2 billion of that as its own equity. The application projects $274 million in tax revenue from the building’s operations and $583 million from the roughly 5,900 jobs it expects to house, against no tenants yet listed. Construction is planned to start in January. Tishman Speyer said in its application: “This project will transform a long-vacant lot into world-class office space while generating jobs, tax revenue, and meaningful improvements to the public realm.”

What’s next

The IDA board holds its public hearing on the abatement September 15, the next formal checkpoint before a vote on the PILOT terms. Tishman Speyer has not disclosed anchor tenants for the tower, and the abatement’s approval, not the site’s zoning or Tishman’s financing, is now the gating item on whether the project breaks ground on schedule. More on the New York market, where trophy office economics are increasingly a function of what the city is willing to subsidize.