Hudson Yards is a gigantic real estate project on New York City's western edge that will be the most expensive development in US history when it's completed in 2025.
At $25 billion, the project costs more than the size of the entire economy of Iceland… which is saying a lot given that Hudson Yards is only 28 acres… literally one millionth the size of Iceland.
According to the plan, in seven years (so they say) Hudson Yards will be a neighborhood of gleaming towers with high-end retail, fancy law firms and private equity shops, overpriced apartments, and ridiculous works of art like "the Vessel".
The Vessel is basically a giant woven staircase made from copper; it stands 15 stories, weighs 600 tons and has 2,500 climbable steps inside.
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And this stairway to nowhere cost more than $150 million.
As the development company's founder Stephen Ross told Forbes, "[Hudson Yards is] not all about the money, really, it's about transforming something and what you leave behind."
Now, Warren Buffett has famously quipped that Rule #1 of investing is: Don't lose money. Rule #2: See Rule #1.
But I would add Rule #3 of investing: Anytime someone says "it's not about the money", you should run away. Quickly.
Now just think back to the last time a development was stealing headlines for being "the most expensive in US history."
It was 2004. In Las Vegas. And the development was MGM Mirage's City Center – a 67-acre playground on the Las Vegas Strip.
The development, and its 16.7 million square feet of casinos, retail, hotels and condos, was supposed to cost $4 billion. Construction started in 2006. City Center opened in late 2009, just in time for the Financial Crisis.
And the final bill for the Las Vegas City Center clocked in above $9 billion—a full $5 billion above budget.
(Remember, the Hudson Yards developer says their project will cost $25 billion… meaning the real cost will probably be north of $40 billion…)