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  ON THE COVER

Security/PR efforts pays off

Developers enlist consultants
to help manage energy use


Kohl's continues expansion despite retail slowdown

Rival centers join forces

  FOCUS: DENVER AND THE ROCKIES
Mile-High City to get growth
without sprawl thanks to development of abandoned airport

Provo lifestyle center sparks sister project

Prime Retail sells Silverthorne,
Colo., center

Ground broken for Colorado
Mills

  AROUND THE GLOBE
Hurdles for European developers
vary from country to country

MANAGEMENT & MARKETING
Cadillac Fairview honors innovative retailers

'Anti-department' store comes to Canada

  DEPARTMENTS
Update: Brownfield bill seen as victory

Briefs

Uncommon Area

Clicks & Bricks

Buying & Selling: Westfield
nabs Trade Center mall

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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.


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.