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Exactly five years ago today, almost 3,000 people died in the worst terrorist attack in America’s history. People around the world today will remember where they were and how profoundly affected they were when they heard the news that the U.S. had been attacked by such a magnitude. The ramifications of 9/11 have without a doubt changed the way the the United States and the world thinks and interacts.
We also understand the importance of 9/11, but that’s not our focus here. The events of 9/11 not only dramatically changed politics and policies, but it forever changed the landscape of lower Manhattan. Specific for our purpose here, the attack destroyed The Mall at the World Trade Center, a 427,000 square foot underground enclosed mall which was lower Manhattan’s largest retail center.
Built in 1970 and 1972, respectively, the majestic twin towers of the World Trade Center were iconic of America’s might and force. Over 50,000 people worked in the buildings, and over 200,000 passed through the Center each day. The complex even had its own zip code, 10048. Therefore, it isn’t surprising this mecca of human interaction would also contain a large portion of retail.
The Mall at the World Trade Center existed mostly underneath the eastern half of the block the WTC occupied, under WTC buildings 4 and 5, and also underneath the open-air World Trade Center Plaza. The WTC Plaza, also known as the Austin Tobin Plaza, which featured the now-infamous sculpture “Sphere” by artist Fritz Koenig. The damaged sculpture now sits in Battery Park and will be integrated into the site design of the new World Trade Center. WTC 4 and 5 were both low-level 9-story office buildings which housed clients such as Deutsche Bank, Morgan Stanley, and the New York Board of Trade. Standing immediately adjacent to the east of WTC 1 and 2, WTC 4 and 5 sustained major damage on mostly upper floors and were subsequently removed as part of the WTC removal project.
The Mall was also the point of access or transfer to the Chambers Street (served by A and C trains) and World Trade Center (served by E trains) Metropolitan Transportation Authority Subway lines and at the PATH (Port Authority Trans-Hudson Railroad) rapid transit line to New Jersey. Both stations reopened with temporary yet fully operational facilities in November 2003.
The design of The Mall at the World Trade Center was essentially an underground figure eight, spanning most of the subterranean level beneath WTC buildings 4, 5, and the WTC Plaza. At the edges of the ‘figure 8’, different spokes radiated out: into the WTC complex to the west, onto the streets, or into the PATH and Subway stations directly connected to the mall. Decor was modern yet decidedly dated. This mall didn’t need to sell shoppers with fanciness – they were going to shop there regardless.
With an impressive roster of about 80 stores, The Mall was made up of many popular typical mall retailers, including Sam Goody, The Limited, Express, Structure, Warner Bros. Studio Store, J Crew, Banana Republic, Ann Taylor Loft, and the list went on. The Mall also had service-oriented and convenience retailers such as Duane Reade drug store, and several fast food establishments. Popular sit-down or fast-casual restaurants were in the works when the mall was destroyed.
Also just prior to its destruction, The Mall at the World Trade center was leased by its owner, The Port Authority of New York and New Jersey, for 99 years (with the surrounding office space of the entire World Trade Center included) in a joint agreement between Westfield America and Silverstein Properties. Under the agreement, Westfield would manage the retail space and Silverstein would manage the office space. Based in Los Angeles, Westfield currently owns an impressive roster of enclosed, regional malls across the country, and was excited in the Summer of 2001 to have nabbed this one. And that’s not surprising, since retail sales in the mall were expected to be over $900 per square foot by the end of 2001. In addition to more restaurants, Westfield also planned to increase the center’s retail capacity by over 50% and add a new impressive entryway. The cost of the lease was valued at $3.2 billion. Westfield was also planning on re-branding the mall as Westfield Shoppingtown World Trade Center, like many of its other malls across the country.
I visited the World Trade Center and its Mall on August 21, 2001, three weeks to the day before it was destroyed, and took the pictures associated with this post except for the mall map which was done by the National Institute of Standards and Technology after the collapse. I had only been to the site briefly in 1998 and in the aftermath of the disaster I was really glad I got to fully experience the World Trade Center before its demise. Finally, it should be noted that all of the employees of the mall were able to make it to safety. Take a look at the pictures and let them be a part of your remembrance of 9/11 and the World Trade Center.
Update 9/22/06: I was recently contacted by reader Marc, who offered up some photos and information concerning the World Trade Center’s mall and concourse from the early 1980s, and also a scanned mall map from 1999 or 2000. The mall was decidedly downmarket then as compared to when it was destroyed in 2001, and anchored by Alexander’s and Lamston’s (kind of like Woolworth’s).
The rest of his very interesting photo set featuring photos taken all over Manhattan (including more of the World Trade Center) from the 1980s can be seen here. Thanks a lot for the submissions!
86 Responses to “The Mall at the World Trade Center; New York, New York”
Freakishly morbid. Those are great pictures; thanks for sharing.
My wife used to work in the Federal Reserve Bank building; sometimes we’d meet up at Borders after work and go out to dinner. When I first heard about 9/11, one of my first thoughts was strangely that we’d never go to that Borders again. We just found a bookmark from that store marked with the WTC address – really, really eerie.
September 13th, 2006 at 2:37 am
Yeah, that is really eerie. I remember we had Krispy Kreme donuts during our last visit there, and then I saw footage of that store after the disaster. There were trays of donuts waiting to be sold, a fully stocked beverage case, and someone had left a rag and some cleaning solution on a table like they were in the middle of that when they abruptly left. There was a film of dust all over, but the store itself seemed mostly unscathed. Very bizarre to think about.
Think they made that Borders small enough? (Keep in mind, this was WAY before the whole Borders Express deal.)
Hello, I was wondering if you took any pictures of the Mall at the WTC area itself. I visited the Mall one time in my life, on June 15, 2001, and I’m trying to remember what it looked like. With your primary interest being in retail/mall space, I’m surprised you didn’t put any pictures of it up! Actually, if you have any more pictures at all, I would love to see them. Could you put the rest of them up for us to see? I know I would VERY much appreciate it. Thank you.
Wow, I had been looking for any information on the mall for weeks now. I’m glad someone documented it, even partially… I bet it was just like any other common mall you’d see and no one would want to take pictures or keep pamplets or brochures or anything like that… But just to have some type of memory of what was and something that I’ll never see just made it that much more precious. Same with pictures of inside the towers. Thank you so much. I think ever since 9/11, I’ve been taking pictures of everything, even if they’re in no danger of being destroyed anytime soon… just in case.
Thank you bvery much for printing the WTC Mall directory, I’ve been looking for it everywhere, my pen-pals from New York, Duane, Herbert and Lula “Belle” Chapman used to live around the WTC, Herbert and Duane were on the mall that awful day, but they narrowly escaped, the 3 moved back to California 3 months after, they were shopping at Gap when it happen, they still have the Gap shirts in there closet as an eerie reminder, THANKS AND GOD BLESS AMERICA!
I strangely remember express in the background while watching the movie, and I think i see the little nook where they ran for safety
p.s. does anyone know if that actually happened?
Answer to Davis
I saw the movie, and my friend says that yes, there was Express, and when Lola saw it, she said there was also a Duane Reade, Victoria’s Secret, Ben and Jerry’s, Crabtree and Evelyn, J CREW, and all other shops, but about the firefighters really taking cover, she says she has no clue, but the stores (which Herbert says are just product placements) were real, there really was a Express, but about the characters taking cover between Ben and jerry’s and express, they have no clue, hope this help you, BLESS AMERICA BRAH!!!
Thanks for the great article. Having been to the WTC plaza/mall a few times and lunching at the nearby Arthur Treacher’s restaurant last in early 2001, it was nice to be able to re-trace my steps and see a map of the area because I didn’t have it committed to memory. I’ve returned to the area since 9/11 but was confused as to where everything was located, since I used to come out from the 2/3 subway station in the mall, and followed the same path to the street each time I was there.
In spring ’01 I went on a date with someone and we walked around the mall after. He lived downtown and worked in one of the towers. We talked a few times after. I had a hectic summer and we thought we’d connect again when my sched. slowed down.
About two months after 9/11 I tried calling his number. I waited cuz I was kind of afraid. I got a recording that said the number was no longer in service. I just let it ride. I’ll hope for the best: that he made it out and just changed his number. It was an indescribable feeling — the not knowing. That’s my memory of the mall.
Sometimes I wonder what it would be like to have an “alternate reality”. Somehow, the planes were taken by the people riding the planes, the terrorists were detained, and life went on like normal. The Mall of course, would be Westfield World Trade Center. Westfield would probably have added an anchor or something, maybe like Filene’s Basement. 😉
By the way, this is the first Labelscar post I ever saw.
July 7th, 2007 at 2:56 am
I was reading an article on this mall on Wikipedia and it said that a major expansion was to take place, with possibly a Macy’s and Target as anchors. I think the paragraph was made up because I could never see a Macy’s work so close to the flagship store only a few miles away. Also, it said that the mall was to receive a 200,000 square foot expansion, which is legitimate but a Macy’s and Target combined would add up to more than 200,000 square feet. There was also never a Virgin Megastore at the World Trade Center. Perhaps it could’ve been added as part of the expansion.
That’s strange…where’s the citation? I was the one who wrote that article! And someone added to it….
It was made by an IP, as well. Figures.
Iwas in Jersey city 2 saturdays prier to that day & took path in the wrong direction ending up at WTC instead of Journal SQ.
Alexander’s, the off-price regional store was once in the mall here. Any idea where?
May 28th, 2008 at 12:50 am
I belive it was by the entrance in the very top photograph, the one with the pink sign, i found an old directory picture on Flickr, which i copied to my computer, it had a huge store next to tower 2, i wish i remembered the website, just enter world trade center mall, it should come up on Yahoo! i guess
there was in the just ended arc in garth ennis’s the boys called i tell you no lie G.I. in that universe it was not the wtc that was destroyed but the brooklyn bridge. i’m sure you can get scans of it from scans daily on livejournal.
I remember in the summer of 2001, my wife and I were on our honeymoon in the Poconos. Being from Minnesota, she always wanted to swim in the ocean. We made our way down to Union Beach, NJ, on Aug 2. In the distance, you could see the lower Manhattan skyline, the towers standing out in the haze. We had a great time on the beach. However, all day she complained about forgetting the camera back in the Poconos and not able to take pictures of NYC. Back on I-287 and hearing about the camera again, I commented,” It’s New York City, they’re buildings, they’re not going anywhere anytime soon!” I had no idea one month later the city and the world would change forever.
I’ve never gotten to visit the towers. And there aren’t many pictures fo the inside. This mall reminds me of the Crystal City Shops in Arlington, Virginia. Scary.
What was the trade center and mall like before the attacks?
my memory of the world trade center mall was from 2000. Back when i was living in ny.
I was dating a woman who used to work at morgan stanley on the 78th floor.
she had always spoken of the WTC, the mall, and windows on the windows on the world restraunt on the top of the WTC.
one day her friend herself and i went into the WTC to get tickets for a show. That was the first time (and last)i ever was inside the world trade center. We then went under the WTc into the mall. i was taken aback by the city under the city!.
We had always wanted to go back, but the towers didnt last nor did our relationship.
The majority of people on the internet are probably too young to know anything about the history of the WTC, but the political infighting that occurred before its construction ultimately (albeit unintentionally), resulted in the success of the retail portion.
The original WTC site was to be on the east (Brooklyn) side of lower Manhattan. The project was to be funded largely by the Port Authority of NY/NJ. The NJ element (including the governor) rightly questioned how the state of NJ would benefit from a WTC on the east side of Manhattan.
The fighting went on for years, but eventually a deal was reached that NJ would take on renovations of a dilapidated old private rail line that ran under the Hudson (which became PATH) and NY would build a vast underground subway transfer station at the WTC to accommodate it. This deal allowed NY to house the WTC and NJ would provide feeder rail lines to the thousands of Jerseyites who commute into the City every day.
For the first 10 years, the WTC office space was considered a colossal failure. What sparse occupancy it did have was occupied largely by the Port Authority (its builders) and the state of NY. However, the Mall at the WTC and the retail preceded the eventual success of the towers by at least a decade because of the thousands of commuters who passed through the subway transfer station daily.
August 8th, 2009 at 2:13 pm
Im so sad about it really
i cant beliefe it
and my girl friend she is daid she was in 65 floor
she is daid at 10.5 when collapse tower
im sorry really
when im remember it want cry
and im from Italy and she call to me she say i love you she call at 8.50am
im so so sorry about it
and i whis to all people go to life go to future]
[…] Since I was a small child, I was able to visit the World Trade Center many times. We just called it the Twin Towers. I remember, in the early 80’s I think, they would hang a King Kong balloon, like a parade float, up on one of the towers. The trip to see our family in Brooklyn and on Long Island took us past here and I would lay down in the back seat so I could see straight up the building. My grandmother used to shop in the mall there. Many folks outside of NY didn’t know there was a mall. […]
Thinking today about my years working in 2 WTC in the late 80s, early 90s and all the time I spent walking, meandering, lunching, snacking, rushing, worrying, laughing and just people watching in that concourse. Thanks for all these photos and for your essay.
So to the person who commented about the Borders in the mall, I believe that it was a two story Borders, according to the mall directory. I even saw some footage on some documentary on the History Channel that clearly shows the Borders store in 5 WTC. It clearly appears to be a large bookstore just from that perspective.
September 12th, 2009 at 12:23 pm
You are right…it was a two story Borders and a huge on at that! The floors were spaced out in a greater fashion and the store was bathed natural light, thanks to the two story windows.
October 12th, 2009 at 11:06 pm
This map brought back so many memories! I grew up in Lower Manhattan and I was in high school on September 11th. My friends and I would often hang out in the mall during the winter when we were bored. I got my first junior high school prom dress at Express and applied for my first summer job at the Body Shop (I, perhaps fortunately as I applied over the summer of 2001, did not get it).
Thank you so much for posting this. I still vividly remember the feeling of walking down into the mall via the Vesey Street entrance. In fact, it seems so recent in my memory that I sometimes think I could still walk there now if I wanted to.
I do have a brochure from the mall – shows the maps and lists all of the stores. I had brought one home one day when I worked there – fortunately, I was not at work on 9/11. I will be happy to answer any questions about the mall that I can from the brochure – just post your questions.
Randy Flynn Reply:
July 15th, 2012 at 5:43 pm
I would greatly appreciate it also if there is a way to get a copy / picture of your brochure. I worked on the 89th floor, north side, north tower from ’83 to ’86 and have many fond memories of time in the mall. I hope you see this post. During my tenure, there was a Chase Bank branch where the Banana Republic shows in the blog’s picture, and a pretty good coffee shop in the space facing the entrance of 1WTC. In the space where the Gap shows was a good bar and open restaurant, and the Store of Knowledge was an excellent book store. Much more….
Thank you in advance, Randy
LinLin, that’s awesome that you have a mall directory of the WTC Mall, can you upload it here on Labelscar or at least write down the list of all the shops?
Oh wow, this was eerie to see. I was in NYC visiting some of my family’s old haunts (I was born there and lived there until I was 5) in 2001 and we visited the WTC on either July 10th or 11th. I bought a doll at the Warner Brothers store for my collection and for whatever reason never took it out of the box. I’m glad I didn’t now.
I was only there a few times–once as a toddler and once as a teenager–so my memories are dim. Thanks so much for the photo essay.
March 27th, 2010 at 2:40 am
I grew up about four blocks away from the WTC, so the mall was a prime hang out location for me and my friends when we were teenagers (I was 17 in 2001 when they were destroyed). I sometimes feel embarrassed that many of my strongest and fondest memories of the WTC involve trying on dresses at the Express and smelling the soaps at Crabtree & Evelyn. What I wouldn’t give to have one more mindless wander through those seemingly non-descript marble halls!
November 10th, 2010 at 7:33 pm
Liz Neil Diamond and the song “beautiful noise” allways reminds me of WTC! im english but i love u americans and what u live for!!!
we will never know what REALLY happened! and its terrible that we are in this situation!!!
btw my E.M.A.I.L is
keithgoddard”@”yahoo . co. . uk
On September 26, 2003 I went to New York City to celebrate my 11th birthday. It was a lovely trip especially walking around Times Square, Rockefeller Center, and looking at the swaying of the Empire State Building. I just wish I’ve could have visited the Statue of Liberty and the World Trade Center(if only it wasn’t destroyed by those babarians). It would have been a pleasurable experience for me to visit the Top of the World and the Mall. I hope they will build the Twin Towers in Jersey City, Brooklyn, Chicago, or somewhere, just bring those two All-American icons back!
May 29th, 2010 at 5:09 pm
I have receipts, still, from the WTC mall. Lynn’s Hallmark, Lamston’s, etc. I don’t know why I have them. One is even dated September 11th. The place bubbled up people from the PATH–it had a pulse. There was always an ever present echo in the halls. On off times, without work rush, you could hear your heels echo. Once and a while you’d see a homeless person meander by, too (ever notice no one mentions their deaths, many lived under the WTC). I don’t remember Border’s Books–I remember a Barnes & Noble, though (I could be wrong). I was there for over five years in the late 80’s and left right before the first WTC bombing in 1993. Around the time I left, I had to make a trip to NJ and took the PATH and, by mistake, got off at Jersey City. There was a big crowd of many. The Blind Sheik was there, and his followers were all gathered. Around that time, too, a bus one morning was leaving Jersey, going to lower Manhattan via the Holland Tunnel (this was before the first WTC bombing)–the bus was “hijacked” and overtaken by a guy who screamed out something in a foreign language–the bus crashed into the Holland Tunnel–the bus driver died, and a guy lost his leg and nearly died from the crash, with other injuries as well. It was an odd time prior to the ’93 bombing. I left NYC then. The WTC concourse was a place I did most of my gift shopping and other shopping as well.
They began evacuating us halfway up the long escalators after we exited the PATH train that day. Thanks for posting these as this was my last good memory of the WTC before I went outside and saw what was happening.
September 14th, 2012 at 2:46 pm
T, I was also coming in from the PATH trains that day. I will never forget the human chain formed by the Port Authority Police when we reached the top of the escalators – nor the loud “Get out of the building” cries. Sadly, I don’t think these poor guys survived.
September 9th, 2011 at 8:09 pm
It’s almost the 10th Anniversary of the darkest day in American History, doesn’t matter what religion you are, please pray for the victims families and thank our military that day, I know I will!
10 years ago this mall was destroyed. The reason it was downmarket in the 1980s, however, was that it wasn’t officially a mall…it was just a shopping concourse until it was rebranded as a mall in 1994.
Sad thinking the two-level Borders would be closed anyway even had it not been for the attacks…of course, the attacks also caused a recession, killing any hope for things like Service Merchandise…
September 11th, 2011 at 3:47 pm
10 years ago… so many loss their lives… God Bless America! Pray for the families!
This topic has long fascinated me. I rember going through it on a school trip in 1978 and being surprised to see suburgan mall stores in the World Trade Center. But I did want to point out that while the employees of the mall tenants might have all gotten out safely, the mall manager, John Eagleson did perish. I had the pleasure of meeting him once when the bank I worked for financed the expansion at Meriden Mall in Connecticut where he worked at the time.
He was profiled in an article yesterday…..
September 8th, 2014 at 5:56 pm
Hi Jim, I recently came across your post regarding my dad, Bruce Eagleson, who was over seeing the redevelopment of the WTC mall at the time of 9-11. His name was John Bruce Eagleson but went by Bruce. He was working for Westfield, and at the time one of the projects that fell within his region was Westfield’s redevelopment of the WTC mall. The company had recently leased the site for a period of 99 years in conjunction with Silverstein Properties. Westfield had their office space on the 17th floor of Tower 2 (the South Tower). We were able to contact him via his cell phone after news of the strikes on the towers . He told us he was helping the firefighters and Port Authority Police coordinate the evacuation efforts of the buildings and that he was going to leave soon. We were told by his fellow Westfield employees that he was last seen going up the stairs to the 17th floor where their office was located to grab portable radios to give to the Port Authority and to make sure their office space was cleared. That is the last known information we had about his location that morning. He has never been found.
You are correct, he was the general manager of Westfield Meriden prior to being promoted to oversee a number of malls on the East Coast including the WTC project. Thank you for posting the link to the Record Journal article. Your memory of him and shared experiences with him means a great deal to our family.
I am excited to see Westfield return to the WTC site and finish what Westfield and my dad started 13 years ago.
September 24th, 2011 at 10:35 am
I can well remember me and my dad going to the mall back in 2001 of august and my dad getting me a plush tazmanian devil doll from the Warner bros studio store located across the strawberry clothing store which i still have to this day and i will never sell it, although it’s sad i never kept the receipt i still have a memory from that store my favorite plush taz, i was only 9 years old at the time now turning 19 this October i will always look back to 2001 and will always remember my dad buying me that plush doll for my tenth birthday, my dad always bought early birthday gifts for me. i am so glad to hear that they will rebuild a bigger and more better spacious mall at the world trade center including another Warner Bros Studio Store.
November 25th, 2011 at 11:28 pm
I have a brown paper bag [sack] with a red apple on one side of the bag
Loves New York
I purchased some souvenirs in the world trade centre in 1986, and to this day still have what I purchased as well as the bag
WTC Retail Site Among Crop of Downtown NY Venues Expected to Produce Record Sales
Dec 1, 2011 11:38 AM, By Elaine Misonzhnik, Senior Associate Editor
When the new retail hubs planned for the area surrounding the World Trade Center site finally come on line, New York brokers say they have the potential to be among the highest producing retail venues in the country. The challenge is that the developers involved in the projects have to get the merchandising mix and layout right to realize the area’s full potential.
After undergoing upgrades in the 1990s, the old World Trade Center mall, located on the concourse level below the Twin Towers, produced $900 per sq. ft. in sales, three times the national average for U.S. malls in 2001.
“The space at the World Trade Center was some of the best retail space around,” says Jeffrey D. Roseman, executive vice president and principal with Newmark Knight Frank Retail, a New York City-based real estate services firm. “After 9/11, retailers were not anxious to go downtown. But when a lot of the old office buildings in the area started being converted to residential, that picked up demand.”
In the past decade, downtown’s residential base has grown more than 50 percent, to 56,000 people, and is expected to reach 60,000 by 2013, according to a recent report from the Alliance for Downtown New York, the organization that manages the Lower Manhattan Business Improvement District (BID).
What’s more, the area has seen a steady inflow of new businesses, from Conde Nast’s 1 million-sq.-ft. commitment at the upcoming 1 World Trade Center to American Media Inc.’s 99,054-sq.-ft. relocation to 4 New York Plaza. About nine million tourists visit Lower Manhattan each year, according to Marcus & Millichap Real Estate Investment Services, an Encino, Calif.-based brokerage firm. That number will likely increase as the World Trade Center Memorial Museum opens next year, says Gene Spiegelman, director in the retail services division of brokerage firm Cushman & Wakefield.
All of those residents, office workers and tourists mean extra shopping dollars. Today, rental rates on high profile streets downtown range between $200 and $300 per sq. ft., Spiegelman says. With the completion of the Fulton Street Transit Center in 2014 and the World Trade Center Transportation Station in 2015, average rents downtown might reach $400 per sq. ft.
“When was the last time New York City saw new transportation hubs?” Spiegelman notes. “If you think about the ease of access for tourists, employees and commuters, that will be driver [for shopping]. So what you see in terms of retail demand in the area today and what it’s going to be tomorrow, it’s really worlds apart.”
Currently, the piece of the puzzle that’s already moving ahead is the renovation and expansion of the retail complex at the Brookfield Office Properties-owned World Financial Center. Previously, the complex lacked synergy between the retail venues located at the Winter Garden and those that were positioned in side corridors, according to Robin Abrams, principal and executive vice president with The Lansco Corp., a New York City-based real estate services firm. It was also difficult to reach.
In June, Brookfield unveiled a redevelopment plan for the space. The $180 million project will involve bringing in three new retail anchors to West Street; creating a 25,000-sq.-ft. European style marketplace with waterfront seating and a 30,000-sq.-ft. dining terrace with views of the Hudson River; and adding 90,000 sq. ft. of in-line apparel shops and 40,000 sq. ft. of restaurants to the complex. In addition, Brookfield will create a glass pavilion that will link West Street to the upcoming transportation hubs via underground pedestrian passageways.
Brookfield plans to complete the upgrades by the spring/summer of 2013.
“They are really carefully looking at remerchandising and re-tenanting the space, and most importantly, changing the feel of the project to become more prominent, and visually pleasing and welcoming, and not so much an afterthought,” says Abrams.
The Fulton Street Transit Center is scheduled to come on line in 2014, and will feature approximately 70,000 sq. ft. of retail space. The Metropolitan Transit Authority (MTA) is reportedly searching for a private property manager to handle retail leasing for the complex.
Unlike the former World Trade Center mall, the new retail complex in the works will include street front retail.
Finally, the Westfield Group plans to open the initial phases of the new World Trade Center retail complex in early 2015. The complex will involve 365,000 sq. ft. of space, but will be configured differently than the old World Trade Center venue, which was in many ways a traditional enclosed mall, with a contingent chunk of space, according to Abrams. The new retail space will be located across multiple levels, including at street level. There will be clusters of retail around each building in the new World Trade Center complex that will be connected by pedestrian passageways on the concourse level.
Westfield plans to spend approximately $612.5 million on the project through a 50/50 joint venture with the Port Authority of New York & New Jersey (PA), which controls the World Trade Center site. Abrams says Westfield and the PA are already starting preliminary talks with potential retail tenants for the space.
The brokers say retailers are already starting to think about making commitments at the upcoming retail venues downtown. At issue is the fact that opening dates for all three complexes are still a few years away. Plus, even though the World Trade Center site comes with a great reputation for retail sales, the fact that the new space will be configured differently makes them wonder if the new configuration will work as well as the old one, Abrams says.
“Before, it was very straightforward,” she notes. “It was very easy to navigate all of the retail and food [offerings]. Now nobody is certain about the final plans and because it’s going to be different, how do you create the synergy and the ease with which people can navigate the different areas? You want people to access all of that retail on the concourse level, in addition to shopping on the street level.”
That’s why apparel retailers in particular still need more convincing to sign leases downtown, says Roseman. At the same time, companies such as Walgreens are taking huge chunks of space in the area in recognition of the renaissance that’s about to take place. In addition to opening a 22,000-sq.-ft. Duane Reade branch at 40 Wall St. earlier this year , the drug store operator recently signed a lease for 22,000 sq. ft. at the former Borders space at 100 Broadway.
Also this fall, discount retailer TJ Maxx signed a lease for a 32,000-sq.-ft. store at 14 Wall Street.
As time goes by, other chains are bound to follow suit, says Roseman. While retailers will still look to Fifth Avenue and Soho to open their initial locations in New York City, downtown will serve as a strong choice for third or fourth or fifth stores that will be far enough from the flagships not to cannibalize sales, he and the other brokers say. They expect to see tenants along the lines of H&M and Zara and Apple at the new World Trade Center mall. And those stores will also have the potential to become the highest producing stores in their chains.
“It’s a very different configuration and a very different retail environment than what was under the old World Trade Center,” Spiegelman says. “But I still think when you pull it all together it will be one of the most productive shopping centers in the United States.”
Urban Retail Continues its Evolution
Dec 7, 2011 10:52 AM, By Susan Piperato, Managing Editor
Cities like New York, Boston and Washington, D.C. have been successful at integrating retail into the urban mix by embracing the vertical integration of traditional shopping center retailers. But is the market oversaturated?
A panel of eight national retailers and developers speaking at the International Council of Shopping Centers’ (ICSC) New York National Conference and Deal Making, held on December 5-6, agreed that, for a wide variety of reasons, urban retail “is not the last frontier, but an evolving and continuing one,” in the words of moderator Ken Narva, co-founder and managing partner of Street Works, a White Plains, N.Y.-based development and planning consultancy.
The challenges urban retail presents for developers and retailers depend on the location of the stores, the availability of mass transportation, trade area population and store product.
It’s important to remember that New York City is “the ultimate urban location, it isn’t American and the rules of Manhattan don’t apply to the rest of the U.S.,” said Peter Ripka, partner at Ripco Real Estate. “No place else has 30 million people all living within 50 miles.”
For urban retail to be successful, there must not be any disparity between function and urban space, said G. Lamont Blackstone, principal of G.L. Blackstone & Associates LLC, a Mount Vernon, N.Y.-based real estate development company. He noted that he often finds an “intrinsic tension” between a community’s desire for parking and the operator’s ideas.
Daniel Shallit, Sports Authority’s director or real estate for the northeast region, said that regardless of a store’s location—whether in a suburban mall or an urban vertical location—Sports Authority needs parking because “you can’t buy a treadmill and take it on the bus or train.” The company has tackled the challenge by offering more soft goods in urban locations and focusing on equipment sales in suburban stores. However, Shallit added, Sports Authority does best when located near transit hubs so that commuters taking mass transportation can notice the stores and return on weekends.
Even when a store is accessible by public transportation, having a few parking spaces can’t hurt. When the Skyview Center in Flushing, Queens, which is located near mass transit, offered free parking last summer, it attracted 2,500 visitors each week and 6,000 people on the weekends, according to Larry Rose, principal with RK Realty Advisors.
East River Plaza stacks traditional power center tenants in a vertical format.
Operating a traditional store in an urban setting is often a mistake, said Patrick Smith, vice president of real estate for BJ’s Wholesale Club. He said BJ’s has taken its urban stores to two floors despite the difficulties and “it’s been worth it—the volume is there if you work with it.”
The key to creating a successful urban store is flexibility in operation and design, said Michael J. Shanahan, vice president of real estate for Burlington Coat Factory. Adaptive reuse has proven successful for Burlington Coat Factory, but has also presented several challenges, including the presence of wide old-fashioned and unmovable columns in old buildings prohibiting traditional racetracks. In addition, sometimes the retailer has had to fight for or give up street presence when it’s located on the second level of a facility, Shanahan added.
For Shop Rite, the challenge of moving into urban areas has not been so much about creating smaller stores, as about learning to be creative with the spaces that are available, said Dennis Bachman, senior real estate representative for Wakefern Food Corp., which operates Shop Rite. . For instance, refrigerator equipment is typically designed for ground-floor stores. One recent urban integration of a Shop Rite store in White Plains, NY involved installing equipment in a second-level location which necessitated the use of a crane, the taking out of windows, and getting permits to close down the street, Bachman noted.
In the end, the integration of urban retail is a complex undertaking with a lot of moving pieces, and the biggest problem with it could be that it takes too long to accomplish, according to Rose.
“The rule of thumb for transit-oriented development retail is that if your kids are in elementary school when the project starts, they’ll be in high school when you finish,” he said.
High Prices For High Volume
New York area retail executives see high-end properties and discount retailers active in market during climate of bifurcation.
Moderated by Jerrold France and Chris Thorn. Edited by Randall Shearin.
Shopping Center Business recently held its annual New York Roundtable, hosted by law firm Goulston & Storrs. While the retail sector in New York, New Jersey and Connecticut is doing well, some attendees pointed to a bifurcation of the market, with high end retailers and discounters being the most active tenants.
Attendees of this year’s roundtable were: Stephen Stephanou, Crown Realty Services; Christopher Conlon, Acadia Realty Trust; Stephen Plourde, The McDevitt Co.; Marshall Felenstein, Felenstein Was & Associates; David Rabinowitz, Goulston & Storrs; Ariel Schuster, Robert K. Futterman & Associates; Deborah Jackson, Weiser Realty Advisors; Patrick Breslin, Studley; Arnold Paster, Peconic Bay Realty; Esther Paster, Peconic Bay Realty; Matthew Harding, Levin Management Corp.; Andrew Schulman, Thor Equities; Samuel Polese, Thor Equities; Richard Brunelli, R.J. Brunelli & Co.; Lauren Holden, Equity One; Nina Kampler, CB Richard Ellis; and Matt Ogle, SRS Real Estate Partners.
SCB: Deborah [Jackson], where do you see the retail sector in New York?
Deborah Jackson: That’s a big question. It’s challenging, but we are in exciting times. From a person who loves retail, it’s exciting. What I’m finding exciting is the activity in Williamsburg [Brooklyn]. Most people would say that currently we’ve had three fashion [areas] — Madison Avenue, Soho and The Meatpacking District. But we’re seeing a lot of tenant interest in the Williamsburg area. Why? A lot of [tenants] get priced out of other areas and you have the traffic and you have a young crowd. Vintage retailers and other types are in the area. It’s like the outskirts of Soho. On streets that weren’t exciting before, people are now saying, ‘Wow this is promising.’ There’s a lot of foreign interest and a lot of new retailers. When our economy goes south, people become more creative.
SCB: In what specific areas do you see the biggest demand for, in the New York market?
Ariel Schuster: Times Square, Fifth Avenue and the 50s. It’s clear the rents there are higher than they ever were, even before 2007. One market that’s really picked up in the last 12 months is the Flatiron district, which a year ago had six prominent vacancies. It has really filled up. You’re seeing a street that seemed to be going the wrong way completely — it was actually the poster child for what was wrong in New York City — it’s now one of the hottest markets and you can’t find space for the right size. The interior of Soho has also been shockingly strong in the last 6 months, like Greene and Mercer Streets. We are seeing that the area of Soho from the south around Grant Street has really improved. The foot traffic is still not there but rents have doubled in the last 6 to 9 months and that’s not even talking about Broadway, which is incredibly hot, and central Spring [Street]. Those streets that were never really considered $150 to $200 streets are now coming up, which to me is really incredible.
SCB: What are some of the attributes that help make New York so unique for retailers?
Stephen Stephanou: Of the urban areas in the United States, there’s nothing that’s more exciting and dynamic than New York City because of the finance business, the garment business, the retail business and the entertainment business. Many people look at it as a center of creativity in the United States. That drives a lot of economic factors here internally. Even though the Euro is not nearly as strong as it has been, the exchange rate is stable enough that many international tourists and European tourists look upon New York as an exciting place to visit. It provides a lot of different venues than some of the European capitals do. Although London has certainly become more exciting in the last 10 years.
SCB: As a public company, how does Acadia look at New York and the surrounding areas and boroughs, as far as retail opportunity?
Christopher Conlon: Acadia Realty Trust chose to focus on an aggressive program to recycle and invest new capital into the urban markets. New York comes first; it’s our backyard. We’re just as excited about Chicago, Miami, Washington and Boston. In New York, in our opportunity fund business, we have a rather large urban development platform, the largest project of which is in downtown Brooklyn called City Point, which is currently under construction. We’ll be announcing anchors there probably before the end of the year. New York treats us very, very well. The barriers to entry couldn’t be higher and population growth in certain selected areas is still occurring.
SCB: Andy [Schulman] and Sam [Polese], how do you, as owners, look at retail opportunities today and as you move forward?
Andrew Schulman: We love New York and we love the high streets. The high streets really hold their value. Even when things get a little bit tougher, they come back much faster. The climate for high streets is incredible right now for retail, especially because space is very tight.
Samuel Polese: At the end of the day, tourism drives a lot of what’s going on in Manhattan. This year, I believe there will be more than 50 million tourists coming to the United States. I think the bulk of them are coming to New York. While they’re here, they happen to buy everything they see because the dollar is weak against their currencies. That is why you see side streets in Soho performing so well and why we see Fifth Avenue now extending down to 42nd Street. We believe that could even continue to 34th Street in the next 5 years.
SCB: [Patrick Breslin], What areas do you see that are in great demand by retailers?
Patrick Breslin: Fifth Avenue is one of the most sought after. People are always inquiring about prices and sales. People are more interested in hearing about how the sales volumes are equated to the enormous rents they need to pay here. A lot of retailers just knock it out of the park from day one. Until space runs out, 5th Avenue is going to be on fire.
Schulman: In Flatiron, you had all of those vacancies and now all of a sudden there are no vacancies. Everyone wants to be there.
Nina Kampler: Because the rent in Flatiron has decreased.
Polese: There was a big disparity. We own a building, 929 to 933 [Broadway], and we’ve watched the rents escalate $100 a foot in 6 months.
Stephanou: It’s a great set of buildings that you’ve renovated too, by the way. The north end of the Flatiron District has really activated, which was also activated by Union Square. So it’s just become a win-win situation for that whole area.
Kampler: When REI opens next month in the Puck Building, we’re going to see a continued southern movement of the retail. There’s a lack of availability and congestion elsewhere and seemingly bargain prices, compared to other parts of the city. You have a whole lot of new area opening up, as opposed to Hudson Yards which people are still looking at with binoculars.
SCB: With the World Trade Center and World Financial Center, is retail starting to come back to Downtown? Is this going to be great?
Kampler: The answer is yes. We’re not going to know exactly how this shakes out until the next 6 to maybe even 18 months go by. But in terms of interest level, it’s escalating. Conde Nast is moving its headquarters downtown [Editor’s note: Conde Nast has signed a 1 million-square-foot lease to anchor the office component of the new 1 World Trade Center building when it opens in 2014, bringing an estimated 5,000 employees with the company]. I think the latest statistic was 56,000 people are now living in the tip of Manhattan, so you now have a 24/7 market.
Stephen Plourde: It really is incredible, a lot of people don’t think about it but downtown south of Chambers Street is the fourth largest central business district in the entire country, behind Midtown, Chicago and Washington, D.C. There’s 90 million square feet of office space down there and when the World Trade Center comes online, that’s another 10 million square feet. The residential is huge. That changes the dynamic into a real 24/7 neighborhood. We’ve talked about the tourism, that’s a huge ingredient between The World Trade Memorial Center opening up. It really will be a special place.
Stephanou: The residential population of lower Manhattan has doubled in the last 10 years. In other words, it doubled after 9/11. People didn’t flee it, people still were involved in it. What’s interesting is that before that it was sort of Tribeca and those areas were more of an adult community versus family-oriented. What has happened now — and part of it has been driven by some good public schools that have been put there — is many young families living there now. So the demand for apartments there is sky high. There has not been the pool of retail properties in an assemblage to drive a lot of new retailers [to the area]. They’re still a little bit fearful of it. They see Broadway, sort of below Chambers Street, which is a little down and dirty. But there are huge opportunities and you have basically the three central retail venues that are underway. There is Westfield at the World Trade Center. Besides the World Financial Center, Brookfield’s modification and expansion of its retail venue and then a rescripting of South Street Seaport that Howard Hughes now has from GGP. The dust hasn’t settled on all of that at this point.
Jackson: Also, the activity on Wall Street. We look at downtown, we see the activity and we know that it’s no longer just a daytime place. But for a lot of retailers, I think there is some reluctance. You show them the numbers and TJ Maxx going down to Wall Street. It’s not like everyone is saying, ‘I’ve got to get there right now.’ But you’re seeing that people are recognizing that there is great demand. You asked the question, ‘what makes New York unique?’ Well, it’s the density, the income levels and the nature of the economic base. When you start to understand downtown, you’re like, ‘Wow, there are shoppers here. There are people that can spend a lot of money.’ It’s sort of like getting people to understand Times Square 10 years ago. But it’s a domino effect. The more activity we see, the more activity we will see.
Schuster: The challenge of downtown is, because it was built early on in New York’s growth, the streets are narrow. There is not a continuous retail street. What happens is shoppers like to shop in lines — retailers like to feed off each other and there are very few pockets. Broadway is the only street other than Wall Street where there is continuous retail. A lot of people are waiting to see about these projects and they’re holding off on committing to downtown until they know if they’re going to have a place in one of these developments.
Plourde: The interest level from aspirational retailers and luxury retailers is higher than ever before at the World Financial Center. Once all the construction settles down, the dust goes away and the two transportation centers come online, you will have a wonderful underground concourse. The connectivity between Westfield and World Financial Center will help create that critical mass of complementary retail between those projects.
Marshall Felenstein: If you look at this morning’s newspaper, Wall Street jobs are going down right now at a heavy level. Stephen [Stephanou] and I were talking when we first walked in about the luxury part of the world here in New York City. One of the major reasons that New York is so powerful is the fact that you do have all of the luxury that tenants want and need to be here. They’re still doing ok. However, it’s the middle guys that are suffering. Their costs are high and the sales do not justify, in many areas, the cost of being in New York.
Kampler: What Marshall is saying is really the whole trend now: the bifurcation of retail. We’ve seen it coming and it’s a confirmation of that. Someone who is an affluent customer with endless disposable income may have zero off of their balance sheet, but it’s still more money than most people can even begin to fathom and more money than they even can spend. They’re still going to buy their scarves and belts and Anthony luggage. Then, you have the person who is either part of the 9.1 percent unemployment rate or they are underemployed. Or they are just nervous, such as a 50-year-old who’s not quite sure how their money is going to sustain itself. That person may become more of a shopper at Target, Kohl’s and TJ Maxx, and the value that started getting Flatiron going to begin with. You’ve got that bifurcation and I believe that will continue. If you are a retailer offshore or outside of New York and you need to grow your number of stores or grow your revenue, first you’d go to Hong Kong and second, you would go to New York. If you’re going to fail here, you’re going to fail anywhere. So why wouldn’t you put yourself in New York? You may have a Jack Wills that starts off outside of New York, but for the most part, retailers coming from offshore are using New York as their testing grounds. There are fewer mom-and-pops and fewer retailers down the middle; they can’t make it. They’re gone.
Matt Ogle: It’s been interesting to see how investors are looking at the market today. Like Chris mentioned, we’re seeing a lot more international investors saying, ‘Where do we need to focus in New York?’ Across the board, the interest level has been very high in transit-oriented markets. I hear 86th Street all the time and I hear Grand Central. You see a lot of development at the Port Authority. I think you have more margins for error. You have more people passing by your properties. When you look at it, it’s a less risky investment. Investors are more willing to pay that low-cap rate to get in.
SCB: Are investors still bullish on Manhattan?
Lauren Holden: I’m with Equity One and we’re fairly new to Manhattan as an investor. We’re a public company. We’ve generally been focused on the Southeast and South Florida. In the last 18 months, we’ve entered Manhattan, and this comes from meeting with the retailers. Now we have grocery-anchored, necessity-based retailers and we are meeting with the grocery stores, Walmart, TJ Maxx, and Kohl’s; they all want to be in Manhattan. We keep hearing this over and over again, so that’s really one of our top markets.
Matthew Harding: In the suburbs, companies such as Lauren’s are really looking at the New York market as a core market also. They’re seeing cap rates on grocery-anchored centers right back where they were or better. A lot of capital on the sidelines is eagerly looking for core, grade A properties in core markets and we’re seeing that throughout the suburbs surrounding New York City.
SCB: How does the success of New York retail impact New Jersey retail?
Richard Brunelli: In northern and central New Jersey, probably 50 percent of the residents commute to New York. New York is strong. Its suburbs are strong. We have seen our vacancy rates in northern and central New Jersey bottom out. The strength of the New York economy is right at the top of my list. But we also did not experience the overbuilding that you have in some markets like Florida, Arizona and parts of California. There are a lot of great things happening in Newark, for example. In suburban areas that were never given much hope, we see vacancy rates coming down and urban retailers are doing pretty well in those areas also. There are no shopping centers being built. You can count on one hand or less the number of new shopping centers being built in northern and central New Jersey, where you probably have a population of 6 million people. That’s going to catch up. There’s going to be a point in time, and it’s coming soon, where retailers will run out of room. After the Borders vacancies are absorbed — the Linens ‘N Things are gone — we’re watching the absorption of all those mid-size boxes. It’s happening quickly and once we’re out of that space I think we’ll begin to build new shopping centers. I’d say in the next year to 18 months, it will happen.
Harding: We have a lot of properties in New Jersey, New York, Pennsylvania and elsewhere. Certainly in New Jersey, I think the vacancy rate has bottomed out so to speak, but the tenant demand still isn’t quite what it was in the past. Therefore, you will still see a flight to quality and still quite a gap between a Class A grocery-anchored shopping centers and the next tier down. You have solid interest in the top tier. The bottom tier, because of a lack of demand and uncertainty, are tough to fill and you see a larger gap in terms of rents.
David Rabinowitz: We are working with a suburban developer now who is trying to restructure their portfolio and get money to do more. They are having a difficult time getting the money to build new centers in this day and age. It’s hard. We might find ourselves in 18 months with the demand there and the retailers might have to wait. Right now, it’s difficult to get the money to develop on a sustainable basis.
Harding:You are right on. We are just refinancing properties where we’re going to redevelop existing properties with strong grocery anchors. We are trying not to leverage them too highly.
SCB: How available is money? You hear that it’s out there, but can you get it?
Harding: In the suburbs, with the lack of land, regulatory hurdles, financing issues and the ability to pre-lease really makes redevelopment the new development for the coming few years at least.
Holden: We’re working on a development on Long Island, in Westbury. It’s probably one of the first development projects that’s happened in the last few years. The interest that we’ve received from the tenants has been unbelievable; from new tenants who want to come into the Westbury market and tenants who want relocate within the market.
Breslin: Developers have changed their minds about who they will take as tenants. I’ve battled one landlord for a pad site for a $52 billion entity and they would lease it to a $10 million entity for the site we actually wanted. I had to try and explain to the president of this company how the other guy beat me out for that spot.
Ogle: In Manhattan, I’ve seen more and more landlords say, ‘We want an amenity art building, we want a nice place to eat lunch and eat dinner.’ It’s almost like building an icon.
Kampler: It’s something else also. At the end of the day, you could buy that cell phone online and you can’t get a milkshake online. If I were someone with long-term vision, concerned about the viability of my properties and I had just seen the cannibalization of a lot of retailers by consumers voting with their keyboard instead of with their feet, you need to have a certain amount of milkshake retailers as opposed to the cell phone stores.
Polese: Most landlords today, if they have great quality products they aren’t afraid of retailers. If my tenants leave a specific location, I’ll just replace it with bigger and better rent. I’m less concerned necessarily about having credit, although I’ll need a certain amount of it for financing. But at the end of the day, if somebody implodes on me who I gave a great location to and I went with the $10 million client instead of the $52 billion client, the $52 billion client will still be waiting to get there with maybe another $50 per square foot in rent.
Holden: It’s all about the appeal of bringing in the customer.
SCB: David [Rabinowitz], you represent owners. Are owners being realistic with their asking rents?
Rabinowitz: It’s whatever the market will bear. It’s very hard to answer that. The owners seem to be getting very hefty rents. I’m working with one retailer, a West Coast entertainment company, and they’re looking to do their first upscale restaurant in Manhattan. The rent is high.
SCB: What does retail look like in the Hamptons?
Esther Paster: Retail in the Hamptons is a very unique thing. People get tired and they want to come out to the Hamptons. It’s become much more than a seasonal community. People are really spending more than just Memorial Day to Labor Day in the Hamptons. They’re coming out in the spring and they’re coming out in the fall. The Hamptons Film Festival brings us right through the holidays, Thanksgiving and Christmas. The Hamptons is a much stronger market right now. There are fewer spaces that are available, rents are higher and it has really shifted to a landlord’s market. We are essentially a microcosm of what’s happening in New York City and our market absolutely follows New York City, both in retail and in office. After 9/11 we saw a lot of people and a lot of companies moving to the Hamptons; a satellite office for protection. They found that could actually do business in the Hamptons and live in the Hamptons; work and play. It’s something that works very well for people and our market is definitely stronger. It’s less of a mom-and-pop market and way more regional companies. Stronger rents. People want to be there.
SCB: What new retailers have you seen?
E. Paster: Michael Stars took a space 2 years ago, sort of as an experiment. They ended up staying there and doing very well. MacKenzie-Childs has come and has found that they really like being there. Michael Kors has really established a presence. They’ve been there now for a couple of years. Peter Millar is there. J. Crew has expanded tremendously. Ralph Lauren is practically an institution out there. People are really finding that they can make their presence known. It’s also a great billboard for a company, because our rents are not $500 per square foot and our spaces are not that large either. You get a lot of bang for the buck and a smaller space. Everyone is there for a period of time. It’s a very sexy sort of feeling with a lot of parties and a lot of press. People really enjoy it. It’s great for the company.
Polese: Is there a lot of buying and selling?
E. Paster: No, because it really is a finite market. For property owners, what are they going to do with their money if they sell their building? There’s no place to go. It’s similar to New Jersey. The zoning restrictions are very tough. There is no new retail and it’s very tough to get health department approval for anything. The market is the market. Essentially, the retail districts in East Hampton and South Hampton are two blocks long.
SCB: Let’s move back to New York and the boroughs. There is a lot going on in Brooklyn. Could someone expand on that a little bit? What is the activity in Brooklyn?
Stephanou: We have a number of clients who are looking hard at Brooklyn, including the smaller retail on Smith and Court Streets and Atlantic. We’ve also been seeing a lot of attention to the incredible redevelopment of Fulton Street. There are also some private ownerships that have large pieces on Fulton Street in Brooklyn. There was a transformation that was underway right at the time that the recession started, which has certainly cooled a lot of the activity there. But H&M is under construction and there are a number of deals that are very close to being signed. Chris [Conlon] mentioned he has some anchors on his project that are about to be announced. We see a huge opportunity. For some retailers, Fulton Street is still a little bit challenging to get their heads around. But Shake Shack just signed a deal which is sexy and it will bring a lot of traffic to it. I feel very strongly that Fulton Street is going to be what 34th Street may have been 12 years ago.
Conlon: If Brooklyn were a city, it would be the fourth largest city in the country behind New York, L.A. and Chicago. In downtown Brooklyn, where we’ve made our investment, there’s been $3.6 billion worth of private development and investment since 2006. There’s 12,000 new residential units in downtown Brooklyn that have developed since 2007. That area of Brooklyn includes Cobble Hill, Boerum Hill, Fort Green, Red Hook and Brooklyn Heights. You also have 100,000 people that come to work there everyday in MetroTech and other commercial centers. Fulton Street has historically been the retail spine of Brooklyn. For a long time it was the retail spine of New York City — for a couple hundred years. That’s not changing, that’s just transforming. You have Shake Shack, H&M, TJ Maxx, Gap, Express and certain other tenants that have come in. We’re developing 550,000 square feet of retail on four or five levels. We’ve had interesting tenants coming to us and wanting to put a store there, such as furniture tenants, but we’ve held off because we think we’re going to do much better.
SCB: In Manhattan, you had JC Penney, Target and Costco enter. Has that opened the door for retailers who have stayed away and might have been awakened?
Stephanou: There’s a department of lies and rumors. (Laughs). Penney has been successful in the Vornado project Manhattan Mall. It sort of got forced into a physical plant that wasn’t conventional. Notwithstanding the fact that they were up against the 1,000-pound gorilla of Macy’s across the street. Our understanding is that they’d love to have other opportunities in Manhattan and you can sort of figure where those will likely be. But the challenge for anything that’s 90,000 square feet or larger is finding a location that makes economic sense. When you look at a model of the big deals that were done in the Plaza District, those kinds of rents are not the kind of rents that department stores or large specialty stores are likely to step up to. In Brooklyn, a lot of those buildings at one time were family-owned department stores and they got carved up. Now, they are reassembling them for larger retail. We represent Nordstrom Rack in the city. The challenge is finding a suitable location that’s got the kind of column spacing that you want and that has the ceiling heights that you want.
SCB: Is Brooklyn the only hot borough?
Conlon: The Bronx is pretty hot right now. There are a couple new development projects that are on the boards in the Bronx. Queens has always been solid.
Breslin: The Bronx has had a real resurgence in the last 10 years, or in the last 5 years. Fordham Road [in the Bronx] has some of the highest sales per square foot for retailers anywhere in the world.
SCB: What about the malls in suburban markets? Is there still a lot of interest in these properties from a retailer’s perspective?
Kampler: Absolutely. Some of my colleagues are touring with European retailers right now. One of them is exploring Garden State Plaza, Riverside Square, and then going down to Princeton. The other one is up at The Westchester and going that direction. If you’re going to open a store here, and you’re pretty sure it’s going to work, you’re second-tier may be that next ring. Then you’ve got the thresholds and volume of sales that could support the infrastructure you need to start penetrating.
SCB: Restaurants are a strong part of Manhattan. Are there a lot of restaurants opening now? Where are they opening?
Kampler: A third of all leases — someone may have different analytics — signed this quarter were restaurant deals. Has anyone else had that conclusion?
Breslin: Landlords were the ones saying, ‘No food, no food.’ Now, they’re like, ‘Bring me the food.’
Schulman: Our issue is that there is so much money involved in fitting them out and then what kind of entities do you get on these? So I think we would like them as an amenity, but we tend to step away from restaurants. They cost too much and they don’t have credit.
Stephanou: And that’s what really is happening. There was a comment — more in mall context — that new concepts are coming in. But how long can does a concept sustain itself? It was a few years ago, there was a 5-year window and then you don’t really know. We can all think those retailers were totally hot 7 years ago, particularly in the woman’s apparel area.
Kampler: But that’s life. We feel that way about our food — we don’t eat the same meals we ate 10 years ago. We probably feel that way about our spouses. (Laughter). But it’s the evolution of life.
SCB: Where do you see New York a year from now with regard to retail?
Kampler: New York will remain the financial and fashion capital of our country, so it will remain a retail hotbed. It will be a continued drip of vacancies and continuing growth of neighborhoods such as Downtown and what will be coming in Hudson Yards. The population is growing and the vibrancy of the city is on an upswing, in spite of what may be happening with the general economy and in spite of what may what is going on in the rest of the country, unless there’s a cataclysmic event here.
Conlon: It’s going to continue to climb; neighborhoods will continue to mature and expand.
Schulman: I think the streets that traditionally haven’t been strong — in Soho like Greene, Broome, Wooster and Mercer — will continue to get stronger as retailers can no longer to afford to be on Broadway, Prince or Spring. I think it’s going to get stronger.
SCB: Are you still looking for buying opportunities?
Polese: Absolutely, we are proactive right now. We probably have $1 billion that we’d like to put out, and we’d like to put the bulk of it out right here. And I agree with what everyone else has said. We preach this to everyone we talk to — we’re living in a tale of two cities. There’s New York City, and then there’s the rest of the country. In a year from now, New York is going to be stronger and rents are going to be higher. There’s going to be an expansion of neighborhoods like in the Soho market where you see those side streets starting to expand. You are going to see strength in Brooklyn, when you go to streets like Court and Smith that are going to get better. There’s no doubt that Fulton Street is going to get stronger. Montague Street is going to get stronger. I feel very good about being in this market right now.
Breslin: New York has always been a dynamic place and a place where people want to come and do business. You have to educate the retailers a little bit that aren’t here who say, ‘How can I spend $1,000 per square foot in rent?’ You have to explain to them, ‘Don’t look at it as paying $1,000 per square foot in rent; back into the number. Come up with your projections and what you can do in sales, and then you can justify the $1,000.’ I’ve done it many times over with retailers who come into the market new. They say the rents are too high and you say it’s all a function of sales. Once they get that, they go from having one store to adding another 15 within 2 years.
Polese: In the super high streets, there’s the other dichotomy. They look at it not just as a selling vehicle but also as a marketing vehicle.
Holden: I hope that we will have additional assets in our portfolio and I think we will a year from now. We recently acquired the 55,000 square foot Loehmann’s in Chelsea. We’re very bullish on the Chelsea market. A year from now New York is probably going to be in the same place, if not stronger with the retailers. There are going to be a number of new retailers that we’ve heard about downtown that will be announced. I think there will also be a number of new players coming from overseas that we will be hearing if they have opened locations or are coming to the market.
SCB: How about New Jersey?
Harding: I think the New York City suburbs, New Jersey, Long Island, Westchester and so forth, will follow the city. We will see declining vacancy rates and increasing rents to a certain degree for top quality properties again. I think we’ll continue to see reinvestment in existing properties; redeveloping and really maximizing the value of existing properties. As we discussed before, new construction is difficult at times.
Brunelli: I agree with Matt [Harding]. Governor Christie is doing things that will attract new businesses to New Jersey, such as reducing regulations and coming up with incentives that will help new projects get off the ground. Not only in the urban areas, but I think we’ll also see some strong suburban development opportunities become viable again. That would be exciting to a lot of significant retailers that would like to be in northern and central New Jersey. You can’t find boxes big enough to meet their needs. I think rents have come up from the bottom of a year ago, and they’re steadily increasing.
SCB: Has there been a rejuvenation of Newark?
Brunelli: I just attended a meeting in Newark where 400 people came to party because of the 30 or 40 successes they’ve had just in the last year. They have attracted companies like Panasonic. There’s a new hotel, and there are other significant developments in Newark. Corey Booker is a great mayor and with his leadership, Newark has turned around faster. To think, probably 100 developments have occurred in the midst of this recession. Once we’re out of the recession, I think Newark really has a lot of advantages as the largest urban area in New Jersey. I’m a big proponent of Newark and I think it’ll start to attract better retailers over time. With more companies like Panasonic coming, and if we can get those white collar people out on the street shopping, I think some of the better retailers would be shocked at how well they might be able to do there.
Arnold Paster: As long as New York keeps going, it’s going to spill over to us in the Hamptons. We’re all going to see some turnover but we’re going to see unique, high-end retailers want to come out and want to be in East Hampton and South Hampton.
Jackson: What will be interesting in the next year or so is the overflow outside of New York, because we haven’t seen the increases in rents. Our clients are doing short-term deals and lease extensions because they don’t want to sit with these rents long term. We’ve seen a reduction in concessions outside of the city and we’ve seen an improvement in occupancy at many projects. The luxury sector within the malls that have the luxury sector are doing very well and you can kind of do your deal there. I think we’re going to start to see some increase in rents, at first with the better projects. Our clients own top malls in the area and the rents are kind of what they’ve been except in selected areas. We’re beginning to see some improvement. It kind of overflows to the next level of asset.
Stephanou: Are rents reflective of the sales of the retailers? There are a number of retailers are letting leases expire, rather than renewing. We’ve seen that with tenants.
Rabinowitz: I think the high end is going to be fine; the trophy property is going to be fine. That’s where everyone wants to go; that’s where the money’s going. I think there’s a big question mark, and it’s sobering to think about what’s going to happen with the economy and the politics in the city. In New York we’ve had Giuliani and Bloomberg — good mayors, at least in terms of commercial activity and the business end. I don’t know what the future holds. In terms of the economy, Wall Street is losing a lot of jobs. If we go into another recession, I think that’s really going to impact the retailers’ appetite to do more deals, especially at higher rents.
Scaling Down Retail Space
As Large Retailers Close, Brokers Split Spaces for Smaller Shops and Restaurants.
By LAURA KUSISTO
Before online shopping became popular and when big-box retailing was all the rage, Manhattan retail owners would spend big bucks to buy out smaller tenants and assemble large spaces for companies like Borders, Circuit City and Barnes & Noble .
Now landlords are starting to do the unthinkable: split those spaces up for smaller tenants.
Manhattan retailers are facing the same intensified pressures from Internet retailers and a slow recovery that are causing big box stores to close and shrink throughout the country. Only here, landlords are better positioned than their suburban counterparts to deal with the weakening demand by returning the space from whence it came.
Manhattan has lost at least 13 stores including Borders, Circuit City, Barnes & Noble and Filene’s Basement in recent years.
When CompUSA vacated a large space at Fifth Avenue and 37th Street in summer 2008, George Constantin, of Heritage Realty Services, at first hoped for a large tenant to replace it. He even had a deal with a T.J.Maxx for the space in the spring of 2010, but the discount department store pulled back.
Ultimately, Mr. Constantin split the space into multiple pieces, leasing part of it to a drugstore and part to CrossFit, a Reebok affiliate, with one spot still left. “In the end we were actually able to achieve higher rents” by splitting the space up, Mr. Constantin says.
Or take the massive former Borders at Penn Station, which measures about 24,000 square feet, just steps from Madison Square Garden. Vornado is now trying to move a bank into the space and divide up the bank’s former space into multiple restaurants, according to brokers familiar with the space.
A spokeswoman for Vornado declined to comment.
Similarly, at Time Warner Center the landlord, Related Cos., divided the space into two sections, leasing one to C. Wonder, a perky women’s apparel company. The other space has been leased to another clothing retailer, H&M, according to multiple brokers.
“Finding a 25,000-square-foot single-use tenant in this landscape is more difficult than it would have been 10 years ago,” says R. Webber Hudson, executive vice president of Related Urban. Instead, the company focused on luring fashion retailers, offering them smaller-sized spaces.
Related says the announcement of a new clothing retailer to fill the space will be made in a matter of days, but declined to comment on whether H&M is the tenant.
Other former Borders locations have suffered a similar dissection, including one in Kips Bay, which will be partially filled by a smaller-than-usual Staples, according to a person familiar with the matter.
Indeed, even Staples is trying in some cases to shed its big-box image, according to the person familiar with the matter. A newly opened Staples at 39th Street and Fifth Avenue features a winding glass staircase, embossed columns and several smiling sales people that greet customers. The merchandise on the first floor is limited and high-end—Moleskine notebooks, Martha Stewart stationery and electronics.
A spokeswoman for the company declined to comment.
Brokers say filling large blocks of space is difficult in today’s environment, where they’ve seen some clients cut their ideal space requirement in half since the recession.
“There is no bookstore today to replace that and there’s no big-box electronics,” says Karen Bellantoni, an executive vice president of Robert K. Futterman. “I’m not seeing the bigger 20,000 to 25,000 square foot requirements since 2008.”
Brokers say the shrinking appetite for space is due in part to rising Manhattan rents—say $20 million a year for a 25,000-square-foot store on lower Fifth Avenue—which some learned the hard way during the recession can be financially suicidal.
“Everybody in some way shape or format is reducing their footprint,” says Gene Spiegelman, an executive vice president at Cushman & Wakefield. But he adds: “I still think we’re quite far away from the eradication of brick-and-mortar retail.”
One of his clients, CB2, a cheaper sister store of Crate and Barrel, has squeezed into significantly smaller spaces than the typical furniture store, in part by embracing an online component.
The store, which started out as a brick-and-mortar store, occupies just 8,500 square feet in SoHo, while just up the street, a Crate and Barrel has several times that much space in its massive two-story store at the corner of Broadway and Houston, Mr. Spiegelman says.
Experts say that big-boxes are nevertheless likely to fare better in Manhattan, thanks to tourism and the fact that people walking by are more likely to go in and buy goods on impulse.
Indeed, at least one owner big-box electronics store owner insists he’s growing, not shrinking his store presence.
Gregg Richard, president of PC Richard & Son, a 103-year-old family-run electronics business, said they’ve added 16 new showrooms in the last three years.
But he conceded margins have shrunk as they stretch to match the prices of online retailers, such as Amazon. “We work on razor thin margins or no margins at all,” he said.
Write to Laura Kusisto at [email protected]
May 8th, 2012 at 4:31 pm
@SEAN, i have always said if they werent southern chains belk and dillards would be able to fill some of the voids. even bonton or steinmart or even boscovs could replace some of these stores.
Most of those chains are in poor financial shape. Dillard has been a failure in the North and closed stores. Belk and BonTon are too small town to do well in NYC. JCPenney does not do that well in Herald Square.
The article doesn’t mention that NYC has been getting some other stores that can fill big box spaces like Whole Foods, which keeps adding locations.
May 8th, 2012 at 6:57 pm
@Rich, BELK HAS 300 STORES IVE BEEN TO THEIR STORES IN NORTH CAROLINA I LIKE THEM BETTER THAN MACYS. BELK HAS BEEN AROUND FOR YEARS LONGER THAN MANY OF THE OLD TIME NY STORES GIMBELS, ALEXANDERS, B ALTMANS ETC. SINCE JC PENNEY HAS STARTED THIS NEW VENTURE I DO NOT THINK ANY OF THEIR LOCATIONS ARE DOING WELL. DILLARDS SEEM TO BE STILL HANGING IN THERE IN THE CAROLINAS, FLORIDA ETC. MAYBE NYC NEEDS SOMETHING NEW AND DIFFERENT LIKE BELK OR IN THE SUBURBS… . .
May 9th, 2012 at 9:01 am
@rob, Dillard’s hasn’t had the greatest ballence sheat for several years. Macy’s tried to buy them out in 2005 before they baught May one year later. The only store I ever visited was in Las Vegas at the Boulevard Mall & it closed in 2010. Kind of reminded me of Filenes in Danbury Fair, do to the design & layout.
Never been to Belk, but I imagine them having a tough time making it in NYC considering they are struggling in large cities like Charlotte & Rich’s hometown of Atlanta.
May 9th, 2012 at 8:43 am
@Rich, True, but Trader Joes & Fairway are bucking the trend on the shrinking big box store.
I’ve lived in their territory. They would die a quick death in NY. Even in Atlanta, they’re considered a hick store. I remember your endless boosting for Dillard, a chain that operates horrible stores and this is financial trouble.
Nordstrom to Open 285,000 SF Store on 57th Street in New York City
Jun 28, 2012 2:23 PM, Staff Reports
Nordstrom Inc. finalized an agreement with Extell Development Co. to open its first full-line store in New York City, at 225 West 57th Street in Manhattan. The seven-story, 285,000-sq.-ft. department store will sit at the base of a to-be-built mixed-use tower containing hotel and residential space.
The project is currently in the planning stages. Nordstrom plans to open the store in 2018.
“This has been a long time coming for us, as Nordstrom has sought an NYC location for many years,” said Nordstrom Inc.’s President of Stores Erik Nordstrom in a statement. “We couldn’t be happier about the opportunity to be a part of this terrific development project with Extell and feel the location works extremely well for us. We look forward to opening our doors and we view this as our chance to have our best Nordstrom store in the best retail city in the world.”
At a news conference to announce the deal, New York City Mayor Michael Bloomberg said: “It makes perfect sense that Nordstrom—one of the premier names in retailing—would want a flagship store in New York, the world’s premier city for retailing. This is very exciting news for New Yorkers and the millions of tourists who come to our city to shop each year, and this new addition to the West Side of Manhattan is another sign of the private sector’s confidence in New York City.”
The 40,000-sq.-ft. block-through site where the retailer will be located stretches from 57th Street to 58th Street between Broadway and Seventh Avenue. Derek Trulson, of Jones Lang LaSalle, represented Nordstrom in the transaction. Robert Futterman, of RKF, advised Extell Development Co.
June 29th, 2012 at 4:15 pm
@SEAN, I BELIEVE NORDSTROM WOULD RATHER OPEN IN MANHATTAN THAN NANUET. IT SEEMS NORDSTROM AND DICKS MUST BE DOING WELL. DICKS IS OPENING IN SEPTEMBER IN PALISADES AND THEY ARE STARTING HIRING IN MID JULY. IT WILL PUT PRESSURE ON SPORTS AUTHORITY AND MODELLS ALONG WITH FOOT LOCKER FINISH LINE AND CHAMPS. I WAS IN PALISADES JC PENNEY LAST WEEK THEY SEEM TO BE WORKING ON THEIR SHOPS IN THE MENS DEPT.CUSTOMER TRAFFIC BAD.
June 29th, 2012 at 5:39 pm
@rob, Why would Nordstrom go to Nanuet if Paramus is 15-minutes away? After all that Nordstrom is a flagship store & you don’t want to dilute that advantage. Macy’s, Sears & Penney’s will go almost anywhere, but Nordstrom is very selective where they open full line stores.
June 30th, 2012 at 5:00 am
@SEAN, I KNOW BUT I READ A PAGE CALLED THE NANUET PATCH AND THEY ASK PEOPLE WHAT KIND OF STORES THAT SHOULD BE AT SHOPS AT NANUET AND SOME MENTION NORDSTROM,BELIEVE ME THIS IS NOT A NORDSTROM COUNTY AND WOULD BE TOO CLOSE BETWEEN WESTCHESTER AND GARDEN STATE PLAZA.
June 30th, 2012 at 9:57 am
@rob, I’ll bet you dollars to donuts that anyone who make those statements about Nordstrom in Nanuet NEVER shop in Rockland despite living there. How many times have I made that remark on the Nanuet Mall thred?
July 11th, 2012 at 10:22 am
I found exactly what I was looking for: a photo of the PATH escalators. I worked for Cantor Fitzgerald in the mid-80’s on the 107th floor, and walked through the retail concourse and past the PATH every day. At the time, we never thought we’d have to get out. But that was my first thought on 9/11 when I saw the first tower burning while standing on Water Street near the Seaport. The photos from the 80’s and 90’s helped me remember what the retail concourse and PATH looked like, as I now go through the PATH every day and was trying to recall how it was situated. There was a Woolworth’s, Borders, Duane Reade, Innovation Luggage, and of course others. I may even have some old photos of the trading floor. Eerie, yet somehow wonderful.
July 15th, 2012 at 5:48 pm
If anyone received a reply from ‘LIN-LIN’ about somehow getting a copy of her brochure / map of the mall, please let me know. I would greatly appreciate it. (My direct reply to her appears immediately after her posting and gives more explanation of my interest.)
i had been there a few weeks before the attacks. We stopped at a pretzel stand and the owner let us make our own. Im trying to contact him now to see what happened to him. Does anyone know of a pretzel stand in that mall and what the name of it is. thanks
Tenant Mix Key to Success of Outlet Center on Staten Island Waterfront
Oct 11, 2012 2:02 PM, By Elaine Misonzhnik, Senior Associate Editor
Outlet centers have been inching closer and closer to urban cores in recent years, and the upcoming Harbor Commons center in Staten Island, N.Y. exemplifies the trend. Located on the waterfront, steps away from the St. George Ferry Terminal and next to the planned 625-foot Ferris Wheel, the tallest in the world, the project has the potential to become a huge success if it’s handled right, according to real estate sources familiar with New York City’s retail scene.
“This is a whole different concept for outlets—it will be in the middle of the population. Should it work? Yes, it should. It has the waterfront, it has the views, it has people. It could be spectacular,” says Gerard Mason, New York-based executive managing director with real estate services provider Savills.
Conceived by BFC Partners, a Brooklyn, N.Y.-based development firm, the $230 million project will combine 350,000 sq. ft. of outlet stores with a 200-room hotel and a structured parking garage for more than 1,200 cars. The site, which BFC will be leasing from the City of New York for a 99-year term, should provide the center with a steady stream of potential shoppers, including tourists taking the Staten Island Ferry, New York City commuters and Staten Island residents.
Ever year, more than 20 million people ride the free ferry from Whitehall Street in downtown Manhattan to St. George Ferry Terminal. The service, available 24/7, runs about every 15 minutes during rush hours, every half an hour during regular daytime hours and every hour at night. Passengers are not allowed to stay on the ferry for a roundtrip, however—they have to get off at St. George and wait to re-board the ferry back, creating a captive audience, according to Lisa Wagner, principal with EWB Development, which is serving as a consultant on Harbor Commons along with Casandra Properties Inc., a Staten Island-based leasing and property management firm.
“I think so many more visitors will come now because the outlets are right there, with the [added benefit] of the visuals of Manhattan and with this observation wheel,” Wagner says. “We feel that Staten Island is a great place to put an outlet center anyway, obviously the people there are going to use this, but think of the people who are visiting and living in Manhattan and the other boroughs who can jump on the ferry or on the water taxi, have a beautiful trip and an outlet experience. It’s a trifecta.”
Harbor Commons, in fact, will be very similar in concept to outlet centers developed by the Mills Corp., now a division of Simon Property Group, whose properties combined outlet shops with entertainment venues, according to Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York City-based retail consulting and investment banking firm. Nationally, opportunities to build such projects are limited because they require a lot of space and a substantial tourist base, but the Staten Island site happens to fit the necessary parameters perfectly. It also helps that real estate costs in Staten Island are cheaper than elsewhere in the city, adds Jeff Green, president of Jeff Green Partners, a Phoenix-based retail real estate consulting firm.
“Given the fact that real estate is so expensive in urban areas I doubt that urban outlet centers will be a new phenomenon,” he notes. “That being said, the population of Staten Island is such that I believe outlet retail be quite successful” there.
Filling out the details
The main challenge for the developers, according to Mason and Richard Hauer, a New York-based executive with a long history in the outlet center space, will be getting the tenant mix just right. Wagner says the phone has been ringing off the hook with retailers interested in seeing the site plans, and she expects that the tenant mix will be geared heavily toward the preferences of international tourists, which means it will be upscale and focus mainly on American brands. (More details will be released during the project’s “official launch” at New York ICSC conference in December, according to James Prendamano, broker associate with Casandra Properties).
But Staten Island is not a place where an outlet center can be successful with just the regular mix of tenants such as Gap and Nike, notes Mason.
To attract the interest of both tourists and local residents, who have multiple shopping options, it will need strong department store-like anchors along the lines of Saks Fifth Avenue Off 5th and Neiman Marcus Last Call. Brands like Brooks Brothers and Coach can also serve as traffic draws.
Another potential obstacle that has to be handled with skill is the fact that Harbor Commons will be a multi-level development rather than a single-story one, as most existing outlet centers are, says Mason. Shoppers are often reluctant to go up in order to visit more stores; as a result, sales for tenants on the upper floors tend to be lower. If BFC and its partners opt to use those levels for restaurants and entertainment venues, however, they may give people enough incentive to get into the elevators or climb the stairs.
“As a concept, I like it a lot,” Mason notes. “We’ll have to see how the tenants feel about it.”
October 11th, 2012 at 7:12 pm
BFC Partners to Build 350,000 SF Outlet Center Near State Island Ferry Terminal
Sep 28, 2012 11:17 AM, Staff Reports
BFC Partners will develop Harbor Commons, a $230 million, 350,000-sq.-ft. outlet center in Staten Island, N.Y., near the St. George Ferry Terminal, a major New York City tourist attraction and commuter hub. The project will include approximately 100 designer stores, a 120,000-sq.-ft., 200-room hotel and a structured parking garage containing 1,250 spaces.
BFC Partners will enter into a 99-year lease with the city for the site and will also make annual monetary contributions to area wide maintenance. BFC also retained Casandra Properties and EWB Development as strategic consultants for the project, including positioning, leasing, marketing and management.
“Harbor Commons will be the first outlet center in New York City that offers the retail sector a singular and unique opportunity to expand their brand presence in the most vibrant retail market in the country,” said Donald Capoccia, managing principal and founder of BFC Partners, in a statement. “We are also proud to announce that local realtors, Casandra Properties, will be teaming up with EWB Development, a respected name in the outlet industry, as strategic consultants for the project.”
Construction on Harbor Commons will start in the winter of 2014, with completion scheduled for 2016. SHoP Architects designed the center, which will feature open corridors to the water, contemporary materials reflective of the industrial waterfront, a sweeping green roof, grand staircases, glass elevators and streamlined escalators that will help provide an easily navigated pedestrian experience.
[…] square feet of new retail space picking up where the underground Mall at the World Trade Center left off, the new Cortlandt Way will be the street-level shopping cornerstone of the rebuilt site, connected […]
I used to work here back in 1994 – when I was just about 20 years old. I worked at Lynn’s Hallmark and another men’s retail shop – I can’t remember the name – Chess something? anyway, I used to work those two jobs – this was a very hard time in my life. I struggled so much – those two little jobs paid the rent in a emtpy one bedroom apartment in the Bronx (but I’m from Queens) and I was trying to take care of my baby. I never really enjoyed the mall – it was a place that I felt I didn’t belong in. Most of the people shopping there had money and were happy. I just worked and struggled to get by. I remember wondering what people needed (education wise) to work in those offices up in the Twin Towers. I always wanted to work my way up there. Working at the Towers (even if it was just at the mall) inspired me to want to succeed. I looked at all those tourists and office people in their sharp clothing and I wanted to be like them and go home to a nice meal and nice house. Those are my memories of the Twin Towers…..
May 14th, 2013 at 2:11 pm
Thank you for this web page. I lived in that neighborhood at that time, and I’m grateful you’ve taken the trouble to remember it well.
May 26th, 2013 at 2:05 am
I was at the mall July 4th weekend 2001 and went to Borders – I remember it being such a nice, big Borders – so sad all the Borders are closed now 🙁 I do wonder if they’d still be around if not for that recession….
I left without going into the towers and I wish now that I had, but who could have known what would happen two months later?
Chronicling The South Street Seaport’s Post-Sandy Decline
Thursday, September 5, 2013, by Curbed Staff
Camera Obscura, Curbed’s series of photo essays by Nathan Kensinger.
This week, as part of a series on soon-to-change neighborhoods, Kensinger visits the embattled Seaport.
[The Pier 17 shopping mall in the South Street Seaport, which has not yet recovered from Hurricane Sandy, will be permanently closed on September 9 before being demolished.]
The shopping mall on Pier 17 has been one of Manhattan’s quintessential tourist traps for over 25 years. On a hot summer day, the tourists are like bugs circling flypaper, swarming around establishments that include Shoelaces You Never Tie, The Wonders Of Rice, and Christmas In New York. Inside this massive shed, souvenir license plates and steaming trays of cheap food are served up alongside stunning views of the lower Manhattan waterfront. When this troubled old mall is closed down at the end of this week, to be replaced with a shiny new mall designed by SHoP Architects, few New Yorkers will miss it.
Dive deeper into the Seaport’s churning past, present, and future >>
But hidden on the second floor of this building is one of the neighborhood’s last living connections to the South Street Seaport’s past. Her name is Naima Rauam, and she has been documenting the history of the Seaport for over 45 years through her paintings and drawings. “I came here in 1966 as an arts student,” said Rauam, who has maintained a studio in the mall since 2005. With a panoramic view of the Brooklyn Bridge, she is able to paint while looking out over a neighborhood that is currently stuck in a post-Sandy limbo. A neighborhood that has changed irrevocably in the past decade, and that will soon change again thanks to her landlord, The Howard Hughes Corporation.
Rauam and all of the tenants of Pier 17 have until September 9 to close down their businesses. Then the building will be shuttered in preparation for its demolition. “I am on the verge of leaving the neighborhood and am kind of in shock,” said Rauam. “Unfortunately, because of all the storm damaged buildings, I can’t find a space.”
Many of the neighborhood businesses near Pier 17 were severely damaged by Hurricane Sandy and have not yet reopened. On the side streets of the Seaport, restaurants, theaters, and the Seaport Museum galleries have all been boarded up, abandoned, or vacated, while the Fulton Market Building, another mall owned by the Howard Hughes Corporation, has remained closed since the storm.
Given all that, some business owners in the area will be sad to see the Pier 17 mall closing. “They are shutting down the only traffic we have right now,” said Amanda Zink, the owner of The Salty Paw, a dog grooming business which was destroyed by Hurricane Sandy. After the storm, Zink managed to secure a pop-up space inside an old bar at the Pier 17 mall, and has been working there since April. “It was a way to get up and running and to try to save my business.”
After many months of hard work, Zink and her fellow small business owners near historic Front Street are planning to reopen with a block party celebration on October 19. “We are rebirthing the old Seaport,” said Zink. “I’m thrilled to say everybody is coming back.” For Naima Rauam, though, the future is less certain. “I have a storage space in Staten Island,” she said. “I’ll have to reinvent myself.” The destruction of the mall, a building she witnessed being built, is yet another loss in a neighborhood that is increasingly unfamiliar. “To watch something I have been so intimately connected with come down… perhaps I’ll have to sit shiva.”
The Pier 17 mall was opened in 1985, and has had a difficult history. “For all of the high hopes attached to Pier 17 in 1985, it has always had a hard time generating a profit,” according to the Times.
“Pier 17 has been a troubled complex for many years and has failed to live up to its potential,” according to Crain’s. Many of the current shops in the mall are aimed towards tourists.
After Hurricane Sandy, a number of businesses in the mall closed down, including restaurants like Harbour Lights and Finn’s Fish Market Pub.
The entire mall will be closed on September 9th and emptied for a “complete renovation,” according to the Howard Hughes Corporation. Their new mall is scheduled to open in 2015.
On the second floor of the mall, Naima Rauam exhibits her paintings and drawings, which document the recent history of the neighborhood.
Rauam’s first studio in the neighborhood was located inside a smoked fish shop in the 1980’s. For her last few days in her current space, she has a panoramic view of the East River waterfront.
The subject of many of Rauam’s paintings is the Fulton Fish Market, which was closed down in 2005. “The city wanted to get rid of it for 90 years,” Rauam said. “They didn’t realize what an international attraction it was.”
The fish market was relocated to the Bronx, leaving behind its old buildings. This newer section of the market was built in 1939 and is located next to the Pier 17 mall.
The building was denied Landmark status in August, according to the Epoch Times, leaving preservationists concerned that its owner, The Howard Hughes Corporation, “will tear the building down and replace it with a high-rise structure.”
Across the street from the old fish market, the Fulton Market Building (right) remains empty, after being severely damaged by Hurricane Sandy. Its owner, The Howard Hughes Corporation, has has several lawsuits filed against it by tenants who “feel that the developer is manipulating the situation to get longtime businesses out and effectively charge higher rent to more premium tenants,” according to Racked.
Around the corner, many of the businesses that are part of historic Front Street have remained closed since Hurricane Sandy. “Here we are almost a year later, and we just got our keys back,” said Amanda Zink. “All of us got our keys on July 1.”
Zink’s business, The Salty Paw, is one of several empty storefronts on Peck Slip. “Before Sandy hit, we were the most bustling, up-and-coming neighborhood.”
“In the end, I have to say some positive things came from this. We created a merchants association,” said Zink. “We want to be different from the new Seaport. What Howard Hughes is doing is not us.”
Zink’s neighbor, The Paris Cafe, has also been closed since Sandy. “We’ve done a major restoration,” said owner Peter O’Connell, standing in front of his newly restored 1873 wooden bar. “We’ve had to do the basement, the electric. We’ve redone everything here.”
Though renovations continue on the historic older structures of the neighborhood, the future of the Seaport is far from certain. “The key thing that I hope will happen is that we will find a viable way forward,” said Captain Jonathan Boulware, the Interim President of the South Street Seaport Museum. “For the museum and, in the bigger sense, for the neighborhood.”
· Nathan Kensinger [official]
· All South Street Seaport coverage [Curbed]
· Camera Obscura archives [Curbed]
September 10th, 2013 at 10:17 am
A follow up article from the NYT all be it dated.
After Storm, Moving to Update a Mall at the South Street Seaport
By TERRY PRISTIN
Nearly two months after Hurricane Sandy devastated the South Street Seaport on the East River in Lower Manhattan, Dumpsters still line its cobblestone streets and nearly all of the stores west of Franklin D. Roosevelt Drive remain closed.
But the storm surge largely spared Pier 17, the seaport’s long-maligned shopping mall to the east. The operators of the mall, the Howard Hughes Corporation of Dallas, say it escaped damage because it is three feet above the pier, which in turn sits well above the water. And so, the company, which holds the ground lease to the city-owned pier, is moving forward with its plans to transform its dated festival marketplace into an open and airy three-story retail and entertainment center.
The local community board voted last month to support the proposal, despite reservations about the signage and some other design features. Though the plan is still working its way through the city’s land use process, the developer’s agreement with the city Economic Development Corporation requires that construction begin on July 1. David R. Weinreb, the chief executive of Howard Hughes, said in a telephone interview that the company would meet that deadline.
After being blocked off by metal gates and closed until this month because of concerns about the stability of the pier, the mall is now open, though some stores are still closed. Inspectors from Halcrow, an international engineering company hired by Howard Hughes, recently determined that the structure was sound. The pier is south of the Brooklyn Bridge, just beyond Fulton Street.
“The pier got a solid rating,” Christopher J. Curry, a senior executive vice president at Howard Hughes, said in a recent interview at the company’s offices on Fulton Street. City officials confirmed that no problems were found at the pier.
In addition to Pier 17, the company controls 170,000 square feet of space farther inland at the seaport, including stores like Brookstone, Ann Taylor and Coach, which suffered extensive storm damage.
“We’re working diligently to remediate the shops,” Mr. Weinreb said. Asked whether the closed stores would remain at the seaport, he said, “We’re in discussions with our tenants about what is in their best interests. Many of those tenants enjoy very good sales and fully expect and want to be back open.”
From the mid-1980s to the early ’90s, the seaport was a big draw, especially for young people, who crowded its bars and restaurants. But then it fell out of favor with New Yorkers, though it has remained a must-see for visitors taking in other downtown sites, retail specialists said.
The operators of the mall at Pier 17 have long wanted to give it more cachet with city residents. Shortly before the economic crisis, a previous owner, General Growth Properties, a mall developer, introduced a much more ambitious plan for the seaport, including a 42-story tower, which was unpopular with residents.
The Howard Hughes Corporation, which is primarily known for its vast master-planned communities like Summerlin, near Las Vegas, acquired the shopping center in 2010, when it was spun off from General Growth as the mall company was emerging from bankruptcy.
Completed in 1985, the Pier 17 shopping center was developed by the Rouse Company, the creator of marketplaces in Boston and Baltimore. (General Growth bought Rouse in 2004.)
But by the time the mall opened, the marketplace concept may already have been outmoded. The existing mall “has basically been a disappointment to everyone over its life,” Hardy Adasko, a senior vice president for planning at the city Economic Development Corporation, testified last week at a City Planning Commission hearing. His agency sees the redevelopment of the pier as a way of advancing its long-term investment in the waterfront, he said.
In contrast to the marketplace design, which was intended to shield visitors from the grittiness of the port, the new structure will capitalize on its waterfront location, offering abundant views of the bridge. Outdoor space on either side of the pier also will be enhanced.
But the community board and officials of the South Street Seaport Museum say Howard Hughes is impeding views of the river and the ships maintained by the museum by operating a seasonal stage near the pier during the warm months. Mr. Curry told commissioners, though, that the stage will remain.
The new structure will include two levels of glassy retail space that can each accommodate a store of 60,000 square feet — a scale that is rare in Lower Manhattan.
On the floor below those two levels, shoppers will be able to wander through an unenclosed area designed to resemble a neighborhood of city blocks, said Gregg Pasquarelli, a principal in SHoP Architects, whose projects have included the nearby redeveloped Pier 15 and the new Barclay’s Center in Brooklyn. SHoP is working with James Corner Field Operations, one of the designers of the High Line.
“The inspiration was an authentic street pattern,” Mr. Pasquarelli said. “Though you have the ability to move vertically you do not feel you are in a shopping center.” In bad weather, glass doors will descend from the upper floors to provide protection.
A flat roof will replace what Mr. Pasquarelli describes as the faux historic gables on the existing structure. The developers have pledged that at least 10,000 square feet on the roof will be open to the public at all times. There will also be a space for events, but Howard Hughes has not decided whether to incorporate a removable enclosure so that it could be used year round, as the community board has requested.
In his testimony before the planning commission, Mr. Curry also promised not to lease space to big-box retailers like Walmart and said the company planned to install a “world-class” food market in the so-called Link Building, a 13,000-square-foot structure next to the pier that is part of the redevelopment plan.
But otherwise, in the year since it signed its redevelopment agreement with the city, Howard Hughes has spoken in only the most general terms about how it will fill the space at Pier 17 and has not said how much it plans to invest in the project. The developer initially hired Crown Retail Services to market the space, but the two companies parted company earlier this year.
Pressed by Amanda M. Burden, the planning commissioner, to describe the “flavor” of the tenants he was seeking, Mr. Curry said, “Retail is an important element of the project, but will not dominate it.”
Mr. Weinreb said he was traveling extensively nationally and internationally to market the project to “tenants unique to New York from all over the globe” and “great chefs from all over the world.”
But there will be competition, because Howard Hughes is marketing Pier 17 to tenants just as two other major retail projects are under way in Lower Manhattan.
Brookfield Place, the Battery Park City office complex formerly known as the World Financial Center, is updating its retail and restaurant space and planning to install a food market on the Hudson River waterfront in the style of Eataly in the Flatiron district. And Westfield is developing a 365,000-square-foot shopping center to be spread over multiple levels at the World Trade Center.
Elizabeth H. Berger, the president of the Alliance for Downtown New York, a business improvement district, said Manhattan below Chambers Street is “underretailed,” particularly for a rapidly growing residential population of 60,000. “I think Lower Manhattan will only benefit from a density of retail experiences,” she said.
Jeffrey D. Roseman, an executive vice president at Newmark Grubb Knight Frank, a brokerage, said an attraction like Cirque du Soleil might help Pier 17 withstand the competition. “If they are able to figure out the right kind of tenant mix, then it could be a home run.” he said.
Westfield Sells 7 U.S. Malls to Starwood for $1.6 Billion
By Nichola Saminather – Sep 16, 2013
Westfield Group (WDC) agreed to sell seven malls in the U.S. for $1.6 billion to an affiliate of Starwood Capital Group LLC, as the company consolidates its U.S. portfolio to fund higher-return activities.
Westfield is selling malls to redeploy capital into planned development projects, the Sydney-based shopping-center owner said in a statement to the Australian stock exchange. It will retain a 10 percent interest in the shopping centers, which will be managed by Starwood.
Westfield, founded by billionaire Frank Lowy, is exiting properties in the U.S with lower productivity and fewer redevelopment opportunities, mostly in the Midwest and north-west, to reinvest in higher-return assets and projects both in the country and overseas. It divested seven U.S. malls in April 2012 to Starwood for $1 billion and sold half stakes in six Florida malls to O’Connor Capital Partners for about $700 million in March, while maintaining management rights.
“Westfield have well flagged their intention to concentrate their U.S. portfolio,” Louise Mylott, executive director for specialist sales, and Lou Pirenc, REIT analyst, at Morgan Stanley, wrote in an e-mailed note. With this transaction, Westfield “has exited all of its Midwest assets outside the Chicago area and all non-core West-Coast assets.”
Westfield will own and operate 40 malls in the U.S. following the sale, and average annual specialty sales at its malls there will increase by 3.8 percent to $513 per square foot following the disposal, it said today.
Slowing sales among retailers and rising borrowing costs are sparking concern that U.S. mall landlords could be hurt too. Growth in mall-tenant sales for U.S. mall real estate investment trusts, which rose 4.3 percent in the second quarter from a year earlier, peaked in the three months through June 2012 and has slowed each quarter since, according to Bloomberg Industries.
Westfield has started work on the retail part of the World Trade Center in New York, in which it invested $612.5 million in a joint venture with the Port Authority of New York and New Jersey in July 2011. It is also undertaking $240 million of redevelopments at Garden State Plaza in New Jersey and Montgomery in Maryland, it said in August.
Westfield shares closed 1.1 percent higher at A$10.96 in Sydney, extending gains this year to 3.8 percent. That compares with a 13 percent increase in the benchmark S&P/ASX 200 Index (AS51) this year.
The malls Westfield is selling include three properties in Ohio, two in California and one each in Indiana and Washington state, it said. The deal is in line with the assets’ book value as of June 30, and $120 million below their Dec. 31 value, the company said.
“They’re remixing the remaining portfolio based on their views about where the best value is going forward,” said Winston Sammut, Sydney-based managing director of Maxim Asset Management. “This is part and parcel of their strategy, not a change in strategy or outcome.”
Retail sales in the U.S. rose 0.2 percent in August from the previous month, less than forecast and the smallest gain in four months, the Commerce Department said Sept. 13. Higher payroll taxes, limited job opportunities and restrained income growth are moderating consumers’ interest in shopping.
Westfield reported comparable net operating income growth of 4.3 percent in the U.S. in the six months to June 30, compared with 1.8 percent in Australia and New Zealand, and 0.2 percent in the U.K. The company had debt of A$13.1 billion ($12.2 billion) as of June 30, representing 36 percent of total assets, it said in its earnings statement.
Perceptions of Westfield’s credit risk have improved, with the cost of protecting the company’s debt against non-payment dropping relative to other Australian companies. Credit-default swaps on the mall owner have fallen 51 basis points to 106 over the past year. The CDS were 9 points below the benchmark Markit iTraxx Australia index at the end of last week, having traded at a 22 basis point spread above the average a year earlier. Westfield is the fifth best performer in the 25-member gauge over the past 12 months.
Australia’s biggest publicly traded property trust has focused on boosting developments and fund management income since it spun off the domestically focused, more conservative Westfield Retail Trust (WRT) in 2010. The change in strategy followed Frank Lowy’s decision to hand day-to-day control of the company he founded in 1959 to his sons Peter and Steven Lowy.
Frank Lowy emigrated to Australia in 1952 after fleeing the Nazis in Hungary and fighting as a commando in Palestine. He built up Westfield into the world’s biggest shopping-center operator by assets with properties in Australia, New Zealand, the U.S. and U.K. The company has since expanded into Italy and Brazil.
Westfield is moving forward on A$2.8 billion worth of higher-return development projects in cities including London, New York and Los Angeles, the company said at its first-half results announcement last month. It also has a further A$12 billion of projects planned, including a mall in Milan that it is developing in partnership with Italian firm Gruppo Stilo.
“Today’s announcement continues the implementation of our strategic plan which positions Westfield to generate greater shareholder value,” Westfield’s Co-Chief Executive Officer Peter Lowy said in the statement. “We are focused on redeploying our capital into superior retail destinations in major cities through divesting non-core assets and introducing joint venture partners.”
At Westfield London, Westfield is proceeding with an expansion after receiving approval for more than 500,000 square feet (46,452 square meters) of additional space and 1,500 apartments, it said last month.
While the sale to Starwood, the investment firm led by Barry Sternlicht, will dilute annualized funds from operations by 4.5 cents a share, this will be mitigated when it reinvests the funds and by its share buyback program, it said.
The sale won’t affect forecast funds from operations of 66.5 cents a share for the year ending Dec. 31, Westfield said. The deal is expected to close by the end of 2013, it said.
“For this to be the source of capital as they expand into mega-centers is a whole lot more refreshing than coming to investors asking for more money,” said Stuart Cartledge, managing director of Melbourne-based Phoenix Portfolios. “It would be interesting to see for how long they have to maintain their 10 percent stake, because clearly they’re not a long-term holder of passive stakes in assets they don’t even manage.”
To contact the reporter on this story: Nichola Saminather in Sydney at [email protected]
To contact the editor responsible for this story: Andreea Papuc at [email protected] .
September 26th, 2013 at 1:31 pm
@SEAN, WHAT DO YOU THINK OF THE SHOPS AT NANUET SO FAR. LOOKS NICE I JUST HOPE BOTH MALLS WILL SURVIVE LIKE THE PARAMUS MALLS DO. I HEARD THAT PALISADES IS TRYING TO GET NORDSTROM RACK TO THE MALL AND A FEW DESINER STORES LIKE KATE SPADE TOMMY BAHAMA ARDEN B. STORES THAT ARE AT GSP. SO ONCE THE MALL IS RENNOVATED I HOPE IT WILL APPEAL TO THE LOCAL RESIDENTS BUT THEY WILL FIND SOME FLAWS AGAINST IT AND EVEN NANUET MANY ARENT HAPPY ABOUT THE OUTDOOR SETTING. EVERYONE BETTER BE PREPARED WITH THE TRAFFIC ON 59 AND MIDDLETOWN ROAD.
September 26th, 2013 at 3:19 pm
@rob, I haven’t gone there yet, but I hope to take a comprehensive look soon. Nordstrom Rack & those types of outlet stores may fit in at Palisades in small quantities since there are outlets in Paramus & Central Valley. As for Kate Spade & other designer brands, Nanuet really is the best location despite all the winers who won’t shop there.
September 26th, 2013 at 5:21 pm
@SEAN, well burlington coat is discount in palisades and nordstrom rack would be a good draw to keep the winers to patronize palisades not just nanuet after palisades rennovation is done it will draw some dsigners to open there. they opened these rga stores jennfer, contefiel, new yorker lipsy
A simmulation of the new WTC mall.
Chain Store Age
Howard Hughes Corp. breaks ground on South Street Seaport redevelopment
New York — The Howard Hughes Corp. on Thursday officially broke ground on the redevelopment of Manhattan’s South Street Seaport, with a ceremony at Pier 17.
The redeveloped Pier 17 is expected to open in 2016, with a mix of retail, dining and entertainment options highlighted by a one and a half-acre rooftop that will include a restaurant, two outdoor bars and an amphitheater that will hold up to 4,000 people for concerts and special events.
With 40% more open space, the pier will showcase spectacular views of the New York Harbor, Statue of Liberty, Brooklyn and Lower Manhattan. Along with the rooftop destination, the new Pier 17 building will feature a glass façade encompassing a compelling array of stores, restaurants and neighborhood shops. The contemporary design draws from the site’s history as a bustling marketplace and renowned maritime port with the goal of creating an unmatched New York experience with unparalleled waterfront access that is compelling to neighborhood residents, local workers and tourists.
“Today is an important step forward in the rejuvenation of our historic Seaport area as the redesign of Pier 17 maintains open space, view corridors and honors our maritime past by proudly docking nearby the Seaport Museum’s historic vessels to create our signature skyline,” said Community Board 1 Chairwoman Catherine McVay Hughes.
“SHoP’s design for the Seaport’s Pier 17 combines the density needed to support active street life on the waterfront with intimately scaled retail corridors,” said Gregg Pasquarelli, principal, SHoP Architects, the design firm. “The building’s network of interior streets connects to its historic context as well as a series of public spaces designed with James Corner Field Operations, the landscape architect who envisioned New York’s High Line. The new building will be a beautiful space for New Yorkers to connect to their iconic waterfront.”
Westfield Buys Remaining Interest in World Trade Center Retail for $800 Million
New York City — The Westfield Group has taken full control of the World Trade Center retail project by buying the 50 percent interest in the project held by the Port Authority of New York and New Jersey for $800 million. The acquisition represents approximately 365,000 square feet at the World Trade Center Transportation Hub.
Plans for the purchased space include bi-level retail offerings in the new WTC West Concourse pedestrian corridor. The sale also included an additional 90,000 square feet of retail when Tower 2 is developed in the future.
This transaction comes about one-and-a-half years after the initial 50/50 joint venture between Westfield and the Port Authority, for which both parties committed approximately $612.5 million. That brings Westfield’s total investment in the project, which is set to open in 2015, to more than $1.4 billion.
“We have greatly valued our long-standing relationship with the Port Authority and will continue to work in close collaboration for the successful realization of the overall project,” says Peter Lowy, co-CEO at Westfield. “Now, we look forward to 2015 and celebrating the distinctive character and vibrancy of this great city, while introducing Westfield World Trade Center — an iconic, spectacular and world-class shopping, dining, cultural, entertainment destination — to New Yorkers and global visitors alike.”
The Port Authority will retain ownership of the World Trade Center Transportation Hub and continue as contractor for Westfield’s retail assets at WTC West Concourse, the office portion of which — known as One World Trade Center — was completed in May.
The Port Authority also remains eligible for an additional one-time payment from Westfield within the first five years of the retail portion’s grand opening, should returns exceed a previously agreed-upon threshold.
“Today’s $800 million sale of the Port Authority’s remaining interest in the World Trade Center Retail joint venture is a significant step in the Port Authority’s continuing efforts to refocus agency resources on our core transportation mission,” says David Samson, Port Authority chairman. “Westfield’s $1.4 billion overall investment in the project, which represents the largest private sector investment at the site, underscores Westfield’s commitment to provide an exceptional shopping experience to all who visit.”
Sydney, Australia-based Westfield Group LLC manages a worldwide retail portfolio that totals approximately 94.7 million leasable square feet in Australia, New Zealand, the United States and the United Kingdom. The firm either owns or holds an interest in each of the 91 developments in the portfolio, which together are valued at more than $65 billion.
In May of 2001, Westfield partnered with Silverstein Properties to sign a 99-year ground lease at the World Trade Center, the retail portion of which — then known as the Mall at the World Trade Center — Westfield would manage. The company intended to rebrand the property as Westfield Shoppingtown World Trade Center prior to its destruction in the Sept. 11 terrorist attacks.
— John McCurdy
December 6th, 2013 at 5:01 pm
Westfield Takes Control of WTC Retail Space for $800 Million
By Iain McDonald and Nichola Saminather December 05, 2013
Westfield Group (WDC), Australia’s biggest shopping mall operator, will invest $800 million to take full control of the retail space at New York’s World Trade Center.
The company agreed to buy Port Authority of New York and New Jersey’s 50 percent stake in the retail part of lower Manhattan’s World Trade Center site, bringing its investment in the property to more than $1.4 billion, the Sydney-based company and the Port Authority said in separate statements yesterday.
The group, which yesterday said it plans to split its domestic and international businesses, is building on that separation with the World Trade Center deal as it bets on faster growth outside its home country. The U.S. will account for two-thirds of properties managed by the new global business, Westfield Corp., and income from the assets will grow by as much as 6 percent in 2014, it said yesterday.
“This is a great addition, and it’s the type of asset and location that sits neatly with Westfield’s strategy,” Tony Sherlock, Sydney-based head of property research at Morningstar Australia asia Pty. “There’s not much risk to this project, and if you want valuation upside, you want it on your balance sheet, not someone else’s.”
Westfield first acquired a 99-year lease interest in the retail concourse at the original trade center six weeks before it was destroyed in the Sept. 11, 2001, attacks, and sold it back to the Port Authority in December 2003. The group agreed in July 2011 to pay $612.5 million to take a half stake in a joint venture with the Port Authority to develop the center. The retail complex is scheduled to open in 2015.
The project will encompass about 365,000 square feet (34,000 square meters) of retail space, with another 90,000 square feet to be added in the future, according to the statement.
The Port Authority owns the 16-acre (6-hectare) site. It includes the 72-story 4 World Trade Center, developed by Larry Silverstein, which opened last month; 1 World Trade Center, the Western Hemisphere’s tallest skyscraper, set to open in January; the 9/11 memorial, a 9/11 museum, a performing arts center and a mass-transit hub designed by Spanish architect Santiago Calatrava.
Westfield shares fell 2.3 percent to A$10.53 at the close of trading in Sydney, compared with a 1.4 percent drop in the benchmark S&P/ASX 200 index.
Westfield’s investment will allow the Port Authority to “refocus agency resources on our core transportation mission,” Chairman David Samson said in the statement.
Westfield, which jointly owns malls in Australia and New Zealand with Westfield Retail Trust, yesterday proposed combining their stakes to create a new company called Scentre Group. Its overseas operations, in the U.S., U.K. and Italy, would become a separate entity, Westfield Corp., it said.
The move advances its attempts to distance itself from Australia and New Zealand, where it expects to see the slowest growth this year of all its markets. Westfield spun off half of its Australian and New Zealand malls into Westfield Retail Trust in 2010, and billionaire co-founder Frank Lowy and his family sold their 7.1 percent stake in the trust in February.
Frank Lowy is Australia’s fourth-richest individual with a net worth of $5.2 billion, according to the Bloomberg Billionaires Index.
Westfield Corp. will have a $1.2 billion share of $1.4 billion of projects under construction, including the World Trade Center, the company said yesterday. It also plans $9 billion of future projects including malls in London and Milan, it said.
In the U.S., where the group forecasts growth of as much as 5 percent in 2014, retail sales in October recorded their biggest gain in three months, while a private gauge on consumer confidence rose in November from a month earlier, beating a preliminary reading.
Westfield’s acquisition of the 50 percent stake in the World Trade Center’s retail space represents a 30 percent premium in value for the authority, according to yesterday’s statement.
“In addition, the Port Authority will have the potential to receive an additional one-time payment from Westfield within the first five years after the retail grand opening, should Westfield exceed certain agreed-upon return thresholds,” the agency said.
To contact the editor responsible for this story: Andreea Papuc at [email protected]
A friend of mine was telling me a story about a man named Artie, who had been shinning shoes in the mall of the WTC for as long as he could remember. Does anyone remember him and if so know if he surrived 911?
Was wondering if anybody remembers the man that shined shoes in the Mall. Aparently he had been there forever. I believe his name was Artie.
SCB New York’s Evolutionary Retail
December 16, 2014
Published in From The Magazine
A group of New York retail real estate executives gathered in mid-October at Goulston & Storrs’ New York City office for SCB’s annual retail roundtable.
With several new projects under construction and demographics in the boroughs changing,
New York’s retail scene is evolving.
Roundtable moderated by Jerrold France and Randall Shearin
Shopping Center Business held its annual New York Roundtable recently at the offices of Goulston & Storrs in Midtown Manhattan. More than 20 area executives [see below] participated from the Tri-State area’s retail real estate community.
New York Retail Roundtable Participants
Samuel Mizrahi, President, Commercial Division, Century 21 Mizrahi Realty
Deborah Jackson, Managing Director, Cushman & Wakefield
Nina Kampler, President, Kampler Advisory Group
Stephen Stephanou, Principal, Crown Retail Services
Tim Collier, Vice President, Leasing, Acadia Realty Trust
Ed Hogan, National Director of Retail Leasing, Brookfield Properties
Richard Brunelli, President, R.J. Brunelli & Co.
Ariel Schuster, Executive Vice President, Robert K. Futterman & Associates
Michael O’Neill, Senior Director, Cushman & Wakefield
Victor Menkin, President, Menkin Realty Services, Inc.
Andy Graiser, Partner, A&G Realty Partners
Andrew Miller, Vice President, Forest City Ratner
David Rabinowitz, Director, Goulston & Storrs
Ken Simon, Vice President, Real Estate, Heidenberg Properties Group
Lisa Rosenthal, Managing Director, The Lansco Corporation
David Ruddick, Executive Director, Leasing, Westfield
Richard Cohan, Retail Consultant, 34th Street Partnership
Helen Putterman, President, Cohen & Company
Matthew Harding, President and COO, Levin Management
Mitchell Salmon, Managing Director, Garrison Investment Group
Peter Braus, Managing Principal, Lee & Associates
Joseph French, Associate Vice President, Investments, Marcus & Millichap
Special thanks to our host, Goulston & Storrs.
SCB: How has the market changed over the last year?
Jackson: What has evolved is that there are so many hot areas for new developments and retail expansion. We have areas like The Hudson Yards and Downtown that are booming with the World Trade Center and Brookfield Place. There have been huge deals down there with Zara and Urban Outfitters. Amazon has also announced a store at 34th Street; Microsoft is opening on Fifth Avenue. It is harder to sit here and say, ‘Gee, everyone is interested in Soho.’ Across the city, everywhere is exciting.
Stephanou: I agree. Areas that were not on everyone’s radar screen several years ago clearly are now. Downtown is probably the most important story because of what Brookfield is doing at Brookfield Place and what Westfield is doing at the World Trade Center. The Zara deal downtown is interesting because it shows that retail is willing to deal with challenges, like non-conventional spaces. The exposure is so great it outweighs the challenges. Outside Manhattan, there is significant activity occurring in the boroughs. A month ago, Macy’s opened a new store in the expansion of Bay Plaza in the Bronx. Related’s project in Brooklyn — Gateway — has a new JC Penney, Nordstrom Rack, DSW and other players. That project doubled in size and has opened strongly for retailers, from all reports I’ve heard. The Empire Outlets project in Staten Island is intended to capture a lot of tourists.
SCB: We have representatives from two of the largest projects downtown — Brookfield Place and the World Trade Center. Ed [Hogan], what do you see going downtown?
Hogan: Our recent exciting news is landing Saks Fifth Avenue for a full-line, 85,000-square-foot store that will be in the heart of Downtown. Our center is about 300,000 square feet; it is 90 percent leased at this point. We have established Brookfield Place as the destination for the luxury shopper Downtown. We also did a lease on Church Street with Saks Off Fifth, next to Century 21.
Ruddick: I’m amazed about what is being created Downtown. It is unique, from a global perspective. It is beyond shopping, if you look at what we are doing with events, digital and retail. It will be a total experience for customers. There is a new sense of place there. We have 150 stores under one roof that is temperature controlled. Our center will have contemporary design, high street, retail and entertainment all under one place. When we opened Westfield London — it was a £1.1 billion investment — I see a similar synergy in what’s being created in Downtown Manhattan. What we are doing, along with what Brookfield is building, is creating an epicenter of retail.
SCB: Do you think Downtown will be the place to shop for tourists?
Ruddick: There is a new pulse; I think Manhattan is a series of many pulses. The size of the market here is extraordinary. There are more than 52 million tourists visiting each year, spending $35 billion each year, including their hotel room and food. That is a market by itself. We think we will be getting 13 to 15 million of those tourists a year to our center.
Hogan: Downtown is changing, and tourists will be part of that, but not the entire market. You’ve never seen $30 billion of construction happen in such a finite area in the U.S. before. Everyone is going to want to see it. If you add the tourists to the already dense demographics there, it is a marketplace that is much needed.
Braus: I don’t think it will supplant Midtown as a primary shopping district for tourists but, as Brooklyn has become more of the center of gravity for people to live, it will be so much easier for them to go Downtown than it will be for them to go Uptown. Brooklyn will be well served by the stuff you are doing.
SCB: You have been doing a lot in Williamsburg. How is that market changing?
Braus: Williamsburg is an exciting, emerging market. A lot of tenants are going there. The branding of going there is so big for these companies. J. Crew has just opened a store; Madewell signed there. Urban Outfitters has done a store called Space Ninety 8. These brands recognize that the opinion leaders are in Brooklyn. It is a great place for brands to try new and interesting concepts.
Stephanou: When you walk on Bedford in Brooklyn, there are so many foreign languages spoken. When you talk to the retailers in Williamsburg, they have very sophisticated customers who live there; the customers are not stumbling across the stores. These customers come from different parts of the world, and the United States, of course. There are other areas that have changed rapidly. Eataly has transformed the Flatiron District, and has been the catalyst for the area north of 23rd Street. Union Square is also fantastic. To sophisticated shoppers, these are all interesting places.
Schuster: One point about Downtown, for the retailers I represent the Condé Nast move was a pivotal moment [Editor’s note: Media company Condé Nast moved its headquarters to floors 20-44 of One World Trade Center in November, taking 1.2 million square feet of office space that will house 3,400 employees].
Jackson: Condé Nast also was pivotal in changing the perception of Times Square years ago.
O’Neill: So much of Downtown’s recent success and momentum is the result of clarity. If you look over the course of the last five years, there was a sense that retailers wanted to understand what was happening Downtown. They were paralyzed by what was unknown — what was coming down the pike. The retailers wanted to see the plans. Now they have that clarity. The retail community, by and large, follows rather than leads. Now we have the confines and parameters established in the market.
Graiser: I am excited about the markets that are growing. We spend a lot of time with retailers who are trying to close space and restructure leases. We are seeing more New York City leases come to us. Retailers are telling us that they can’t afford it anymore. These retailers have jumped in with both feet fast; it was the herd mentality. We hardly had any national retailers who were looking to dispose of New York City leases, now they are. Landlords won’t have a problem, because there is so much demand. I am a little concerned with how fast some of these retailers are growing in New York.
Rabinowitz: You do see some of that. Union Square Café was one case where they could not afford the increase in rent. How high are the rents going to go and how will retailers pay for them? I walked home last night to the Upper West Side and I did a very informal survey between Broadway and Columbus/84th Street. On the west side of Broadway I counted 11 retail stores that were closed. They may be re-leased, but they are closed. I also question where retail is here.
Harding: Our business is cyclical in nature. We’ve been going up for a long period of time. At some point, it will have to turn around. DSC 7786
(left to right) Richard Brunelli, Deborah Jackson, David Ruddick and Nina Kampler.
Kampler: For some retailers, there are limitless opportunities because there is limitless capital because there is limitless consumerism and demand. For others, maybe it is time to end. When was the last time you went to a restaurant that was around 15 years ago, other than a few strong institutions?
Graiser: There was a great article in The New York Times over the summer about high end restaurants that were responsible for the development of some of New York’s neighborhoods. Many of the leases are coming up, and they are not going to be able to afford to stay in those neighborhoods. There is a long list of restaurants waiting to pay that rent.
Kampler: In New York, you have to ask if it is a neighborhood location or a tourist-driven location. Besides the fact that New York is the epicenter of tourism in the U.S., there is something else at play. Ninety percent of tourists now say that their number one activity is shopping. Tourists are reinforcing all the retailer expansion. How many tourists are going to the Upper West Side? Downtown, when you are done with the museum and the memorial, you can go to Brookfield Place and Westfield and Empire Outlets on Staten Island.
Menkin: We are not stockbrokers. We don’t have posted exchanges. At the end of the day, there is a strong element of confidentiality that runs throughout our industry. Because of that, it is difficult for landlords, tenants and brokers to get a good read on what is happening with certain [lease] situations. The effective rents have to be considered with the landlord contribution, the rent concession and the percentage provisions. These elements of the deal are known to the parties to the deal. It is unusual for anyone outside those parties to get much insight to that. The Upper West Side stood as one of the premier areas to live in the city. It still is, but as housing took the turn that it took, and more people began to live in Brooklyn and other areas, that lifestyle component doesn’t work for retailers on the Upper West Side anymore.
SCB: Change is constant in retail. Richard [Cohan], there have been some new changes in the 34th Street area.
Cohan: New York has recovered from the recession stronger than anyone would have believed. We are thrilled that Amazon is coming to 34th Street. It will bring even more people. The publicity and media coverage has been phenomenal. We are finding in our district that new restaurants are opening successfully.
French: The boroughs also have huge growth. There is 4 percent population growth [yearly] in each of the boroughs, 6 percent in Staten Island. The boroughs are underserved from a retail standpoint. Upper Manhattan — formerly known as Harlem — is missing all kinds of services.
Mizrahi: In Brooklyn, specifically, there is a lot of change occurring. There is regentrification happening. Flatbush and Knickerbocker avenues were always underserved; there are a lot of vacancies in those neighborhoods but the rents are climbing. We have seen a big change in services that are coming into those areas. I’m doing a lot of deals with urgent medical care facilities, dental care facilities and pharmacies. Retailers are not able to service those communities anymore because of all the hipsters are moving into the area. There used to be apartments that were renting for $1,100 per month; now developers are coming in and rents are $2,500 to $3,000 per month. A lot of people who were living in those areas are moving away. The retailers who were left cannot service this new affluent renter. There are bars and restaurants that are opening; it is becoming a much nicer area. This is not just Williamsburg, it is all moving south.
Stephanou: Brooklyn is unique. Jamestown is creating a project out of warehouses they have under control [known as Sunset Park]. It will be everything from manufacturing to photo studios to artisanal bakeries. There are opportunities. In Williamsburg, the opportunities were created because you could rent spaces that were inexpensive. On Bedford now, the asking rents are $200 or $300 per square foot. There are people who are priced out. I’ve told a number of retailers that I’ve worked with that they are sitting on a time bomb in Manhattan. They have leases that are maturing; they may have options but they are at fair market rents. If you are not a retailer who has hundreds of stores, you may find that you can’t pay the rent, even though you are doing well.
Rosenthal: There is a disconnect right now. A number of stores have indicated that they are not breaking even right now. In areas like Madison Avenue, prices are very high. There is also a lot of vacancy right now. Some European retailers might take a Madison Avenue property as a billboard, but for companies who need profitable stores they will either have to negotiate hard or go to Third Avenue.
Menkin: So far, I haven’t heard anyone raise the Internet. A lot of what we are talking about is ‘experience’ retailing. Whether that is Brookfield Place or the regentrification of Williamsburg, when you go to these places you are going there not just to buy something, but to have an experience.
Collier: Successful retailers are going to be the ones who figure out omnichannel retailing.
Salmon: When you have an omnichannel network, coupling online with bricks-and-mortar, if a shopper returns something, the retailer has a 107 percent sales return [people will buy more than their original purchase] once they enter those four walls. That is part of why Amazon is locating on 34th Street. They also realize that the experience is part of living. An exchange with a computer is not necessarily satisfactory.
SCB: Many online retailers have reported that their sales have gone up when they started opening physical stores.
Kampler: Omnichannel is the integrated experience. It is not about segregation of the different experiences, it is about the integrated experience.
Rabinowitz: We work with retailers who are traditional bricks-and-mortar, but they are doing more online. The result of omnichannel retailing is that retailers are going to have smaller stores. We are already seeing that. Maybe in Manhattan it won’t be a big deal because it is a challenge to find large spaces anyway. In the suburbs, I think it will be more apparent.
Ruddick: The convergence of retail and digital is happening now. It is about the sharing of information. As soon as we can determine the trust formula — the sharing of information with retailers and landlords — that will give us the completed package. The visit to World Trade Center starts on the couch. It doesn’t start when you get to the door. That is usually the research for the trip, and the social media associated with the fact that you are going to the World Trade Center today and linking that with your friends. When you arrive, you will have a personalized, customized message greeting you. It is not just saying there is 50 percent off today; it’s about personalizing the experience you have to your taste. It is about recommending the next store you visit. Everyone wants to go to a place. When this convergence happens in the next few years, everyone will understand the nature of the Internet. There is a huge advantage, not a threat.
Stephanou: There are commodity products that are easy to buy on the Internet. The savvy retailers are buying into Internet companies for the technology. One retailer I work with has invested in several young tech companies who are pushing Internet selling technology. In-house, that would take them 10 years to develop, but they can easily buy it.
Menkin: Luxury retail is about as strong as it has ever been. The experience of going to Madison Avenue and buying that beautiful bag or pair of shoes is part of what people are buying into.
Salmon: We own and asset manage millions of square feet in secondary and tertiary markets. A lot of what we are seeing in Manhattan is that the middle of the market is gone. The high end is there and the value-oriented shopper is there, but the middle is less there.
Kampler: And it will be less there when we gather again next year.
Salmon: You need to shop in the supermarket, but you also want to have an experience when you go. That’s why there is an entertainment component to shopping. You have to be a smart owner by recognizing these things. Buying by the pound in secondary and tertiary markets isn’t necessarily the answer.
Kampler: The retailers who are not just surviving, but thriving, have figured it out. They are taking a bifurcated approach to the consumer demand. Ralph Lauren, for example, has its luxury component at Madison Avenue and 72nd Street, taking over the old Disney store. They also have the Polo store there, which is more aspirational. H&M is capitalizing on its infrastructure, realizing what people can aspire to and what they can access.
Simon: As a small owner, creating a sense of place has tremendous implications for me. We could never afford to do what a Westfield or Brookfield is doing — creating a sense of place.
Ruddick: You can buy a spin bike for $750 and use that at home every morning at 6 a.m., or you can go to SoulCycle and pay $35 for a class. There will be 70 people there tomorrow morning, all of whom have trudged to get there to have this sense of community. If you do the math, why wouldn’t you put earphones in and ride a spin cycle in your bedroom? Because you want to be part of a community or have a sense of place. For developers like us, the investment to create places like this is critical. There’s also a flight to quality among all retail owners, which is where you want to own the best assets. That takes a continual investment.
Harding: On a smaller scale, we see a flight to quality in our suburban portfolio. You still have to be number one in the market if you want people to come to your center.
Simon: As a management company, if you can develop that technology you offer a tremendous advantage to owners like me because we can’t afford to do it.
Salmon: We looked at a number of properties in suburban New Jersey. They were best in class in their markets. Maintaining those environments is an expensive proposition. The more you allow them to slip, the more you are dinged for that when you sell. When you are in a market that is not as galvanizing as New York City, you have to look at all the resources available to you in that market and work them.
Brunelli: The best shopping centers have the best tenant mix. In the suburbs, creating a sense of place could mean that you host a car show on a Friday night.
O’Neill: One area that we haven’t touched on that is such a critical component today is food and restaurants. The white table restaurant business is changing drastically. Food brings frequency and extends the shopping experience to any development. Time Warner Center has been a wild success, even 10 years in. The most important tenant they landed there was Whole Foods. It brings a tremendous amount of frequency to Time Warner Center.
Stephanou: You need to have approachable food — places where people can go to lunch every day.
Hogan: For Brookfield Place, food is a huge component of our success with the neighborhood. Food is a different business than it was a few years ago, because of the Internet and because of TV. People care about what they eat. If you are 25 and making a living in Manhattan, you are going to treat yourself to good food and a good experience. That is where you see younger people splurging.
SCB: Aside from projects, how important are food venues and grocery stores to neighborhoods?
Menkin: In New York, there are three segments to the food industry. One is the major developments that manage their tenant mixes effectively. The next is the in-house food services, like catering, hotel and corporate food services. Last, you have the Wild West — the restaurants and cafes. It is every man for itself; one landlord could not care less about what the
building next door is doing. It is challenging for a restaurant or café operator to break into any kind of market. The cost of entry is huge. I’ve been marketing a location on the Lower East Side where a California firm invested $5 million to build out a 5,000-square-foot restaurant that lasted two years.
Ruddick: It used to be that you had to have food because people had to eat while they were in your development. Now, people travel for food. Everyone is a culinary expert.
Kampler: Other than the uber wealthy with the giant apartments that are mostly empty, you have young people who are marrying later and having smaller houses. People do relatively little in their apartments: they exercise and shower at the gym, they eat out and they live at work.
Salmon: Regarding the impact on communities, the Meatpacking District has a project underway [Gansevoort Market] that hopes to create food as an anchor. New Yorkers want to have diversity and energy with the food offerings. DSC 7849
(left to right) Richard Cohan, Joseph French, Mitchell Salmon and Richard Brunelli.
Cohan: Even Macy’s Herald Square has embraced food. They have four Starbucks in Macy’s. There is a McDonald’s, there is a pub; and Stella Restaurant is on the sixth floor.
Simon: There has been a startling change in this area in the size and scale of supermarkets. Fairway, Whole Foods and others have changed that.
Menkin: A lot of supermarkets are now incorporating on-site dining.
French: We are clearly under-supermarketed. There is greater demand in the boroughs. The Bronx has one supermarket. There are 150,000 people within a mile and there is one supermarket; over 1 million people in three miles.
SCB: Is there a need for more daily use retail, like drug stores and grocery stores, in the boroughs?
Mizrahi: In the boroughs, there are great incentives for supermarkets. They are trying to lure more healthier foods into the markets. There are quite a few supermarkets that are moving into those neighborhoods. They are generally smaller operators.
Miller: We find that a lot of it is about educating retailers who are accustomed to a suburban environment. There are so many people in New York who walk to shop. If they need a livery, they will take one home. Most are in the immediate vicinity. You have to get the national retailers comfortable that most of their metrics are not relevant in New York and environs.
Simon: The distribution and logistics are also issues for them.
Rabinowitz: Are you seeing retail condominiums being created and sold in the city? Some funds just want to acquire retail; they do not want a mixed-use building.
French: It is huge in the city and they are in high demand. Cap rates [for retail condos] are very low. You have a mixed bag of buyers, including institutional buyers who view them as stable assets. Maintenance is less expensive. The demand has pushed prices up.
Putterman: Last year, we added a department just to sell retail condominiums. In the last six months, we closed one per month in Manhattan.
O’Neill: One of the reasons why you have seen such incredible demand [for investment] in the retail sector is the percentage increase in rents people are able to underwrite comparative to other asset classes. If you look at an investment in office or residential, you are looking at a modest increase in rents each year. Historically, in Manhattan, you have submarkets where you have had 50 to 100 percent increases in retail rental rates. That aspect allows for underwriting that is completely different than other classes.
Lower Manhattan’s retail renaissance well underway
Publish Date: June 25, 2015
Lower Manhattan retail is undergoing a retail renaissance, with three major new projects eager to tap the market’s burgeoning consumer base. The first to open, Brookfield Property Partners’ Brookfield Place, is a reimagining of the former World Financial Center building’s 375,000 square feet of retail space into an upscale luxury mall. Since the center opened in March, tenants have been reporting above-average sales, said David Huesser, CSM, general manager of the shopping center, at an SCTLive event this week. “These stores are aggressively marketing themselves to tourists and office workers,” he said. “They’re not just opening the doors and waiting for customers to come in.” Saks Fifth Avenue will open a store at Brookfield next year.
On the banks of the East River, Howard Hughes Corp.’s eight-block Southstreet Seaport District revitalization is well under way, with retail leasing efforts focusing on local tenants, says Brent Habeck, vice president of strategic leasing for Howard Hughes. The district’s Seaport Studios highlights local fashion brands. “We’re very New York–centric,” he said. “No national or even regional brands.”
Meanwhile, the World Trade Center district will serve as the spine of downtown, with a broad range of tenants serving a variety of tastes, says Peter Huddle, Westfield Group’s senior vice president of U.S. development. “We’re serving everyone from residents to tourists to office workers,” he said. The center is on track to open next year. “We’re about two-thirds of the way toward finishing,” said Janno Lieber, president of World Trade Center Properties and Silverstein Properties. “It’s a better version of New York City.”
One of the challenges of developing downtown, especially in the World Trade Center zone, is dealing with a network of public institutions such as The Port Authority of New York and New Jersey, not to mention vocal citizens groups, executives said. But working with the city also has its benefits, as landlords can pass along utilities savings and other cheaper services to tenants through the city’s economies of scale, Huesser said.
New retailers are driving up rents in Lower Manhattan, but prices remain well below some of New York City’s better-established shopping districts. Average asking rent for ground-floor retail space in the financial district is $234 per square foot, up by 4 percent from a year ago, according to the Real Estate Board of New York.
Downtown stalwart Century 21 is benefiting from the retail growth, says Eddie Gindi, the department store chain’s co-owner and executive vice president. “Twenty years ago Century 21 wasn’t open on Sunday,” he said. “Downtown was not a destination. Now downtown is not just a financial center, it’s a vibrant community that’s full of all the top industries.”
Will all this new space prove too much for the market to handle? “We haven’t added a lot of GLA,” Habeck said. “We’ve reinvented what already existed.”
November 5th, 2015 at 7:34 pm
Another Setback for World Trade Center Transit Hub: Leaking Water
NOV. 4, 2015
Everywhere, the shopping season is about to begin. Everywhere, that is, except at “the most complete retail destination in New York City, the most alluring retail landmark in the world,” as the luxury Westfield World Trade Center mall describes itself.
A persistent water leak is among the problems that have delayed the opening of the mall, which was supposed to be operating by now, to the first half of 2016. It is the latest setback to bedevil the World Trade Center Transportation Hub, the $3.7 billion rail terminal that will also house Westfield’s $1.4 billion shopping center.
The problems of building such a complex, if spectacular, structure have swollen its price tag to nearly double the estimate when plans were announced almost 12 years ago.
Once the hub finally opens, an awe-struck public may forget the tribulations. But at the moment, they seem never-ending.
More than 100 tenants — including Apple, Daniel Boulud, Eataly, Michael Kors, Kate Spade, John Varvatos and Stuart Weitzman — once believed they would be doing business by now with thousands of office workers from Condé Nast, Goldman Sachs and elsewhere; with PATH commuters and subway straphangers; tourists drawn by the National September 11 Memorial and Museum and the One World Observatory; and neighbors.
Westfield World Trade Center is actually a four-block-long interconnected network, occupying the bases of four towers and the concourses among them. But its centerpiece will be the soaring, winged Oculus, at Church and Fulton Streets, designed by Santiago Calatrava. Besides being ringed by two levels of stores and restaurants, the Oculus will also serve as an event space in which Westfield will stage concerts, performances, broadcasts and fashion shows.
Two years ago, the Westfield Corporation and the Port Authority of New York and New Jersey, which owns and is redeveloping the World Trade Center, said the mall would open in 2015. In August, however, Westfield told its investors that it would not open until the first half of 2016.
Authority officials and Westfield executives say they are working together to overcome last-minute hurdles and get the space ready as soon as possible.
The latest twist involves water penetration around the construction site of 3 World Trade Center, an office tower abutting the hub, which began in late summer.
What pedestrians perceive as the solid ground level around the 16-acre trade center is in fact the roof of a 70-foot-deep underground complex that includes much of the hub, including the PATH platforms and many of Westfield’s spaces, most of the memorial museum, 1,000 feet of the No. 1 subway line and enormous mechanical areas.
As many roofs do, this one began springing leaks. The Port Authority traced the sources of the water to the constant spraying done by workers to reduce dust levels as they break up concrete, and to the fact that Tower 3, still under construction, is open to the elements.
Coincidentally or not, DNAInfo reported on Aug. 25 that workers at the trade center were hearing the sound of water behind the walls in the lower concourses and said there were fears the seepage was coming from the slurry wall lining the foundations. The authority replied at the time that “its most recent inspection did not identify any leak in the slurry wall,” a situation that would have required a full-scale evacuation of the site. It did not elaborate on other possible leak sources, however.
On Tuesday, Steven Plate, the director of World Trade Center construction for the Port Authority, said: “The dripping has been reduced dramatically. We’ve made some significant progress. Several spaces are dry.” He said the leak had affected only four of Westfield’s retail spaces.
Westfield, for its part, is reluctant to take possession of any spaces until all of them can be delivered in acceptable condition. The leaks have proved to be one of several sticking points.
“This is an enormously complex and unique project,” Westfield said in a statement issued through a spokeswoman. “We are cooperating and working closely with the Port Authority as they work to complete construction and meet the conditions for the delivery of the retail spaces.”
The authority expects to begin turning over retail spaces in the Oculus to Westfield “any day now,” Mr. Plate said. Eataly is already in possession of its space at 4 World Trade Center and has begun building.
The Oculus should open in the first half of 2016, Mr. Plate said. During a visit on Monday, it looked fairly close to completion. Though the vast floor of grayish-white Lasa marble from Italy was largely covered by plywood, not much imagination was needed to see the glowing, cathedral-like space filled with visitors.
By fall of next year, two new PATH train platforms are to be in service, in addition to those already used by commuters. Finally, the mezzanine above the platforms, which is linked to the Oculus by a grand staircase, is to be finished by the end of next year. The authority has abandoned its plan to open an interim passageway through the Oculus.
Mr. Plate said he believed costs could be held to the lower end of the total budget range of $3.74 billion to $3.995 billion set jointly by the authority and the Federal Transit Administration in 2012.
He added that he was pushing construction as hard as possible to get all three elements — Oculus, platforms and mezzanine — open sooner.
“We want to be aggressive because we owe it to the people, the patrons of New York, New Jersey and the region,” Mr. Plate said. “But we want it to be the wonderful experience that we feel they deserve.”
The chief operating officer of Mr. Boulud’s Dinex Group, Brett Traussi, said his company understood that it was getting into an extraordinarily complex and challenging construction project when it signed a lease for an Épicerie Boulud bar, restaurant and grocery store. It had expected to be open this summer.
“It’s bought us a little bit of time to be more prepared,” Mr. Traussi said of the delay.
He made it plain that he thought it would be worth the wait, for a space that is close to the turnstiles of the No. 1 subway and PATH trains, a few doors down from Apple and in a “sun-filled, beautiful atrium.”
The hair stylist John Barrett is adding a fourth salon at the World Trade Center to those he already runs at Bergdorf Goodman and on Bond Street in Manhattan, and in Palm Beach, Fla. He, too, had expected to open this summer.
“We’re chomping at the bit to get going,” said James R. Hedges IV, chief executive of John Barrett Holdings. “Condé Nast and Goldman Sachs are chomping at the bit for us to get our doors open. I’m really bad at delayed gratification. This is like waiting for Santa Claus.”
The latest word, Mr. Hedges said, was that Santa will arrive in January.
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