Port Authority, Westfield Reach Retail Development Agreement at WTC Site
- Jan 07, 2008
The Port Authority of New York and New Jersey and The Westfield Group have agreed to jointly develop and operate 488,000 square feet of retail at the World Trade Center site. The Port Authority will provide approximately $825 million, and Westfield will provide approximately $625 million toward the $1.45 billion retail project. Prior to Sept. 11, 2001, Westfield had net leased the World Trade Center retail components, which consisted of 427,000 square feet of space, which become one of the highest grossing shopping areas in the nation. In December, 2003, to accelerate the rebuilding at the World Trade Center site, the Port Authority acquired the retail net lease from Westfield. The retail facilities will feature a variety of eateries, ranging from full-service restaurants to casual dining, and local, national, and international specialty shops. While 2008 should be a busy year at the World Trade Center site in New York City, questions are lingering about the pace of leasing activity at the $2.9 billion, 1.7 million-square-foot Freedom Tower. Construction on three office towers, the World Trade Center memorial, and the transit hub should begin this year. But there have been snafus, notably the failure of the Port Authority of New York and New Jersey to complete excavation of the eastern World Trade Center bathtub on schedule. Two leases have been signed at Freedom Tower, one for 600,000 square feet with the Federal General Service Administration, and another for 400,000 square feet with the Office of General Services. But the New York Post reported on Friday that the Federal General Service Administration transaction is not completed, while the Office of General Services pact still requires state government approval. One commercial real estate professional with long-time experience in the Manhattan market said such construction delays should be expected, but did express deep reservations about Freedom Tower. “This is a spectacularly complex undertaking,” he said, adding that, given these complexities, the project has progressed well. But the Freedom Tower may have longer-term problems. “The Freedom Tower is a political expression, not a real estate transaction,” he said, going on the note that it is perhaps telling that, to his knowledge, no private corporation has yet to sign a lease at Freedom Tower, as government agencies typically have more control over their employees than private companies. The building has some major disadvantages, the source said. On the northwest corner of the World Trade Center site, it is relatively removed from the subway, with other buildings on the site offering greater access, he said. “The building is also perceived to be a target,” he said, noting that safety concerns spurred by this status have put it at a further disadvantage, as it will be placed on a five-story concrete pedestal, set back from the street. “It’s going to be removed from street life,” he said, characterizing the tower as largely not “user-friendly” But Port Authority spokesman Steve Coleman disputed that Freedom Tower is not competitive, saying that an underground tunnel under the Freedom Tower will connect to 11 different subway lines, as well as to ferry service. He also said Freedom Tower will be “safe; probably the safest building in the world.” Eric Anton, executive managing director of Eastern Consolidated, believes that Freedom Tower has not received the attention it deserves from either developer Larry Silverstein, the Port Authority, New York Governor Eliot Spitzer, or New York City Mayor Michael Bloomberg. “In 10 years, this building is going to be the centerpiece of Lower Manhattan,” Anton said. “Tourists from everywhere are going to want to go down and see it.” He said a variety of companies, from banks to high-tech firms, should at least want some kind of presence in Freedom Tower, a presence that would generate publicity as well as good will. “I would say to companies, ‘Don’t you want to be in the greatest office tower ever built in this country?” Anton said.