NEW YORK CITY—The year 2014, like its predecessors, went down in the record books as one of the most active years for investment sales in a decade. According to Real Capital Analytics, sales of significant commercial property ($5 million or more) totaled $423.8 billion last year, up 17% over 2013 and back to the volume last seen in 2006. In another healthy milestone, as per RCA, excluding portfolio deals, 2014 sales activity is actually higher than it was at the prior peak in 2007 and, at an aggregate level, have just surpassed the 2007 peak and cap rates in many sectors are at all-time lows.
One of the biggest sales we saw last year was on the site of one of the biggest development projects currently under way—the World Trade Center site in Lower Manhattan. Late in 2013, the Board of Commissioners of the Port Authority of New York and New Jersey approved the sale of the agency's remaining 50% joint venture in the World Trade Center retail project to the Westfield Group. That deal, which carried with it an $800-million price tag, officially closed in March 2014, making it one of the biggest sales transactions—in fact the largest retail investment—to take place last year.
The sale transferred over some 365,000 square feet of retail space across multiple levels within the site, including bi-level space in the newly opened West Concourse pedestrian corridor, and a major street-level and above-grade presence in Towers 3 and 4. A portion of the sale proceeds is contingent on delivery of the above-grade retail space in Tower 3, and an additional 90,000 square feet of retail will be sold to Westfield for additional consideration when Tower 2 is developed in the future.
When the WTC retail complex opens in 2015, it is expected to include a mix of 150 world-class brands and dining options. Westfield has interests in and operates one of the largest shopping center portfolios in the world, with investment interests in 91 shopping centers, encompassing roughly 20,500 retail outlets globally and total assets in excess of $65 billion.
The sale, which according to RCA amounts to $4, 384 per square foot, represents a 30% premium in value to the joint venture between the retail owner and the Port Authority, and brings Westfield's total investment in the WTC complex to more than $1.4 billion. As part of the agreement, the Port Authority will share in a portion of future retail revenues should the project exceed certain return thresholds within the first five years.
“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,” said Peter Lowy, Westfield Group co-CEO, at the time the deal closed. “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.”
Late last year, Westfield its plans for the site in a preview of its retail and dining roster at the World Trade Center, complete with a culinary anchor and a host of other eateries, fashion brands and stores with additional goods and services.
The 350,000-square-foot facility will feature another outpost of the Italian marketplace and collection of restaurants known as Eataly, from entrepreneurial chef and restaurateur Mario Batali. It will serve as Westfield World Trade Center's culinary anchor. “We are particularly thrilled about Eataly at Westfield World Trade Center,” said Nicola Farinetti, CEO of Eataly. ”We weren't really planning on opening a second New York store; however, when Westfield showed us the space we weren't able to say no.”
The shopping center also will have a broad range of fashion brands such as Hugo Boss, John Varvatos, Michael Kors, Stuart Weitzman, Turnbull & Asser and Banana Republic and beauty brands such as Kiehl's and L'Occitane, as well as beauty salon John Barrett.
“Our vision for Westfield World Trade Center is driven by our passionate commitment to culture, commerce and community,” said Greg Miles, Westfield's US COO. “From the core areas of fashion, dining, beauty, entertainment and technology, our mix is well suited to the dynamic and diverse audiences we will serve including local and nearby residents, professionals and travelers from around the U.S. and the world.”
“Being in Westfield World Trade Center puts us right in the middle of the new Lower Manhattan, which is fast becoming one of the most vibrant and energetic places in New York City,” added Cristiano Quieti, president and CEO of John Varvatos. “Our store will be a unique and one-of-a-kind presentation of the brand, tailored to the large and diversified audience of international and local visitors we are expecting.”
“Our dining collection will be a unique draw that will cement Westfield World Trade Center's place in the social fabric of New York City and as a destination for visitors from near and far,” noted Westfield's Miles. “Our blend of casual and upscale culinary options will offer a full gourmet experience.”
He continued, “Westfield World Trade Center will offer visitors access to a wide range of events, arts and other cultural initiatives as well as best-in-class services and amenities supported by a state-of-the-art technology platform that will transform the shopping experience. The unique space will also be home to premiere brand partners creating a one-of-a-kind environment.
“We are devoted to creating experiences that continuously draw residents and businesses together, and to supporting the community as a whole now and into the future,” said Miles.
Keep an eye on GlobeSt.com for more previews of the finalists for Forum's Deals of the Year 2014. For more information on the issue, or to participate, contact Greg Christensen.
Plus, if you have a project that has delivered in the past decade, check out our Pioneering Projects: Developments That Make a Difference, to appear in Forum's April 2015 issue.
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