Westfield to Invest $612.5M in New WTC Retail Joint Venture
- Aug 01, 2011
August 1, 2011
By Barbra Murray, Contributing Editor
The retail segment at the World Trade Center redevelopment has taken a big step forward now that the Westfield Group has entered into an agreement with The Port Authority of New York and New Jersey regarding the terms of a joint venture. As part of the agreement, Westfield will contribute $612.5 million in exchange for a 50 percent stake in the partnership.
The WTC’s premier retail component will encompass approximately 365,000 square feet on various levels of the new WTC Transportation Hub, in addition to the street level space and above grade offerings in 1 WTC and 2 WTC. And there’s room for more; the second building will allow for a 90,000 square-foot augmentation of the development’s total retail space.
Westfield’s relationship with the Port Authority at the WTC goes back to July of 2001, when the Sydney, Australia-based shopping-center real estate company purchased an interest in the property’s retail facilities. In late 2003, the Port Authority bought back Westfield’s share in an effort elude any difficulties that could have materialized regarding commercial rights. Then, in 2008, the partnership was reignited when Westfield reacquired an interest in the retail component.
Today, construction of retail at WTC is coming right along. “As the structure is being built, it’s being built with the retail component in mind,” a Port Authority spokesperson told Commercial Property Executive. “The east-west link, the underground corridor — if you were to walk through you would see that the space is built-out for the retail that would line the corridor.” And of course, the project is a green one. Recycled-content building materials are being utilized and construction debris is being recycled. Phase one of retail construction is scheduled to reach completion in early 2015.
As per terms of the new deal with the Port Authority, Westfield will spearhead the leasing and management of WTC’s retail. While news has emerged about pre-leasing of WTC office space — publishing giant Condé Nast committed to 1 million square feet at One WTC in May — the Port Authority has not revealed details regarding any early commitments to the retail space. However, all signs point to success in lease-up endeavors. Lower Manhattan’s retail market is already in recovery mode, and interest among retailers is increasing, as development moves forward at WTC. By last spring, rents in the Broadway corridor had jumped 36 percent from spring 2010 and a telling 23 percent from fall 2010, according to a report by the Real Estate Board of New York.
“Lower Manhattan has been receiving national and international attention as a result of the progress at the World Trade Center site,” Steven Spinola, president of the REBNY, said. “The rise in asking rents for retail space shows that retailers are looking to capitalize on the increase in pedestrian traffic expected there in the years to come.”
Westfield and the Port Authority’s partnership agreement — which allows Westfield to increase its investment by as much as $37.5 million — is on track to close in the fourth quarter of this year.