The Hudson Companies paradox is simple. This master builder turns into a corporate buffoon when straying from its core mission. We see it on Roosevelt Island. Lots of it. Hudson builds beautiful, even landmark residences, but underperforms when it goes into unfamiliar territory.
By David Stone
Partnered with The Related Companies, Hudson builds Southtown, a new community on Roosevelt Island. Seven residential towers are complete and occupied. One features affordable housing and is beginning to welcome its first tenants. A ninth — and final — broke ground.
Market rate homes in Southtown altered community demographics. Rents went up but so did living standards.
The buildings resurrect Edward Logue’s vision for a Roosevelt Island with sweeping waterfront views, one that was lost to budget restrictions, back in the 1970s.
In that way, Southtown is the most traditional of all Roosevelt Island buildings.
As by attracting a diverse array of new residents, Southtown’s probably done more to economically integrate Roosevelt Island than Logue’s plans ever could have.
And The House, a tower Hudson built on the Cornell Tech campus, broke records as the largest passive residence in the world when it opened.
But the Hudson Companies paradox of epic fails resides side-by-side with this excellence.
The Hudson Companies paradox begins with Main Street retail…
In 2011, Hudson, partnered with Related, signed a deal with the Roosevelt Island Operating Corporation and took control retail development along Main Street.
RIOC long mismanaged struggling businesses, and its board wanted out.
Although Hudson’s website falsely claims the corridor had a 50% vacancy rate, at the time, the businesses, with most storefronts occupied, were shaky. Many, maybe most, fell far behind on rent.
But they did what they were designed to do, serving an isolated community with goods as well as services. Loyalty went in both directions, but unpaid rents were more than the state could or should handle.
Retailers blamed RIOC, which owns their locations, for their plight. False claims about population meant that promised foot traffic never materialized, and building maintenance was poor.
RIOC was happy getting out, and Hudson president David Kramer saw promise. In a Wall Street Journal article, he said new management would “shock and awe” with improvements and upgraded businesses.
Starting out with inflated pretenses set the stage for the Hudson Companies paradox, and impossible to meet promises — based on a tired war theme yet — spiced it.
“Shops on Main is now 90% leased,” claims Hudson’s website today. That echoes claims Kramer made to RIOC’s nearly dormant board of directors in October.
Only one and one-half spaces were not leased, he said, but you’d have to be blind to believe it.
Within weeks, “Available” signs were up in two center of town storefronts, the former Bubble Cool and the long vacant stationery store.
Deceptions
For now, let’s ignore Hudson’s stealth mission to sneak a speakeasy into a string of parks. Who needs that when there’s so much more?
Hudson’s website brags about 90% occupancy for Shops on Main. It says the company swept in to rescue a business district that had a 50% vacancy rate.
Both claims are untrue, and vacancies escalated after Hudson arrived and started evicting businesses.
But about that 90% occupancy rate… Two of the newcomers Hudson highlights are Bubble Cool and Café Eleanor. Been to either recently? One’s gone, and the other never opened, after three years of promises.
Same with Onda, the the long promised Mexican restaurant that never materialized.
What happed to the Italian place Hudson said would replace Onda? Or was that the vacant Bubble Cool?
What about the hardware store they promised to replace the one they evicted? The yoga studio announced last in 2018?
But amid a fertile garden of false claims and promises, one stands out for sheer gall.
503 Main Street, Kramer bragged to RIOC’s board in October, 2019, would be open with — presumably — Eleanor’s Café by the end of the year. That’s a big deal because 503 has been vacant forever.
So, okay, it’s true… Kramer didn’t say which year.
The kicker is that, even as Kramer made this claim, the Department of Buildings had a full stop work order in place, caused by electrical violations. It was posted two full months earlier. In full view from the street.
No business was anywhere near opening. A year later, that’s still true.
Going off its core competency, the Hudson Companies paradox has them scrambling for excuses, explanations that are often false.
Few agree that Main Street is much better than it was eight years ago, and no one believes Kramer’s boast to “shock and awe” came true.
How the RIOC relationship plays into this
Ironically, RIOC’s all too friendly relationship with Hudson may be partly responsible for the latter’s poor performance. Every enterprise benefits from a contrary forces keeping it on its toes.
RIOC’s closer to a royal sycophant, if not as completely obsequious, its board inexplicably credulous.
Conclusion: The Hudson Companies Paradox and the future
Hopes for the future are mixed. Will Hudson get the message and stick to what it does best and really well? Hope springs eternal, but it won’t solve everything.
Neither RIOC nor Hudson admits that Shops on Main is a failure. Not publicly anyway. So, that run of failure may be permanent.
Egos so heavily invested are hard to dislodge.
Stay tuned.
