When the new retail hubs planned for the area surrounding the World Trade Center site finally come on line, New York brokers say they have the potential to become among the highest producing retail venues in the country. The challenge is that the developers involved in the projects have to get the merchandising mix and layout right to realize the area’s full potential.
After undergoing upgrades in the 1990s, the old World Trade Center mall, located on the concourse level below the Twin Towers, produced $900 per sq. ft. in sales, three times the national average for U.S. malls in 2001.
“The space at the World Trade Center was some of the best retail space around,” says Jeffrey D. Roseman, executive vice president and principal with Newmark Knight Frank Retail, a New York City-based real estate services firm. “After 9/11, retailers were not anxious to go downtown. But when a lot of the old office buildings in the area started being converted to residential, that picked up demand.”
In the past decade, downtown’s residential base has grown more than 50 percent, to 56,000 people, and is expected to reach 60,000 by 2013, according to a recent report from the Alliance for Downtown New York, the organization that manages the Lower Manhattan Business Improvement District (BID).
What’s more, the area has seen a steady inflow of new businesses, from Conde Nast’s 1 million-sq.-ft. commitment at the upcoming 1 World Trade Center to American Media Inc.’s 99,054-sq.-ft. relocation to 4 New York Plaza. About nine million tourists visit Lower Manhattan each year, according to Marcus & Millichap Real Estate Investment Services, an Encino, Calif.-based brokerage firm. That number will likely increase as the World Trade Center Memorial Museum opens next year, says Gene Spiegelman, director in the retail services division of brokerage firm Cushman & Wakefield.
All of those residents, office workers and tourists mean extra shopping dollars. Today, rental rates on high profile streets downtown range between $200 and $300 per sq. ft., Spiegelman says. With the completion of the Fulton Street Transit Center in 2014 and the World Trade Center Transportation Station in 2015, average rents downtown might reach $400 per sq. ft.
“When was the last time New York City saw new transportation hubs?” Spiegelman notes. “If you think about the ease of access for tourists, employees and commuters, that will be driver [for shopping]. So what you see in terms of retail demand in the area today and what it’s going to be tomorrow, it’s really worlds apart.”
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