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WESTFIELD
NABS TRADE CENTER MALL
By
Donna Mitchell
The
Mall at the World Trade Center will now become the Westfield Shoppingtown
World Trade Center, thanks to negotiations in April that put part
of the famous office complex in the hands of Los Angeles-based Westfield
America.
The
regional mall REIT partnered with New York City-based Silverstein
Properties to gain control of the downtown New York City office
complex, and that effort was rewarded when the partnership signed
a 99-year lease worth $3.2 billion with the previous owner, the
Port Authority of New York and New Jersey. The authority still owns
the land where the complex is located. When completed this fall,
the deal will put control of the largest U.S. office complex into
private hands for the first time since it opened 30 years ago.
Silverstein
Properties will control the office portion of the 10.6 million-square-foot
complex, which includes the 100-story Twin Towers and two nine-story
office buildings. Silverstein already owns one of the buildings
in the complex, a 48-story office tower built on land owned by the
Port Authority, called 7 World Trade Center.
"This
is a dream come true," Silverstein President Larry Silverstein said
in a statement. "We will be in control of a prized asset, and we
will seek to develop its potential, raising it to new and greater
heights."
Westfield
America will be responsible for the more than 427,000 square feet
of retail space in the concourse mall. As for the mall’s tenant
mix, Westfield America CEO Peter Lowy said it was too early to say
how that would change but noted that the World Trade Center mall
could use more restaurants. And while the concourse mall may not
have its own defined character and architecture like other centers,
Lowy noted that it already has a unique quality as part of the world-renowned
World Trade Center complex. The mall, which features Gap, The Limited,
J. Crew and Banana Republic, should post sales of about $900 per
square foot by the end of this year, according to officials at the
Port Authority, making it one of the country’s highest-earning
shopping centers.
The
agreement represents a special opportunity for Westfield. Port Authority
officials estimate that about 200,000 people pass through the mall
every day, including the estimated 40,000 who work in the area.
"It’s
an amazing amount of people, more than any mall we’ve ever
owned," Lowy told SCT. "The key is to have the retailing there that
can catch the eye of the commuter and entice them into the store.
We will do the job that it demands."
Westfield
officials propose adding between 150,000 and 250,000 square feet
of retail space to the concourse mall, plus a new entryway, Lowy
said.
"Knowing
New York City, that might start sometime in the next five years,"
he quipped.
Silverstein
Properties and Westfield America had originally submitted a second-place
bid for the World Trade Center lease, trailing Vornado Realty Trust
of Paramus, N.J. But negotiations between Vornado Chairman Steven
Roth and the Port Authority broke off in March.
During
the course of final negotiations, the lease was split into two contracts,
with Silverstein agreeing to make lease payments on the office portion,
and Westfield responsible for payments on the retail portion, according
to Catharine Dickey, vice president of corporate communications
for Westfield. Both Dickey and Lowy declined to comment on the amount
of Westfield’s annual lease payments.
However,
Lowy noted that after an up-front closing cost of $130 million,
the current net value of the 99-year lease was $290 million.
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Source:
Salomon Smith Barney
The
Retail REIT Index was designed by Salomon Smith Barney for
Shopping Centers Today. The index is based on total returns
(including dividends) starting at a base of 100 on December
31, 1995. For the period ending April 30, the regional mall
index is at 184.32, up .03%; the strip center index (including
power, neighborhood and community centers) is at 174.00, up
1.5%; and the factory outlet index is at 123.06, up 4.6%.
The index is updated monthly.
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22
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