Opens discussions with Westfield, which successfully ran retailing at original trade center; seeks plan for 360,000 square feet of shop and restaurant space that will be built.
In the last few weeks, the Port Authority of New York & New Jersey has started negotiations with The Westfield Group to try to finalize an agreement reached in 2008 to jointly develop the retail space at the World Trade Center site, sources close to the discussions said.
These sources said the Port wants to know by mid-fall if it can seal a deal with Westfield. That would give the agency enough time to either find another partner or move forward by itself in developing a plan for the approximately 360,000 square feet of retail space that will be initially built at the site. Roughly 200,000 square feet of that space is in the Calatrava transit hub, which is slated to open in 2014.
In 2008, the Port Authority and Westfield signed a letter of intent whereby the Port agreed to provide approximately $825 million toward the $1.45 billion project, with Westfield providing the other $625 million. However, that deal was based on projections of about 488,000 square feet of retail space. That total has shrunk, in part because there are no immediate plans to build one of Larry Silverstein’s three towers.
These sources said the two parties were discussing various economic issues but declined to be specific. A spokesman for the Port Authority declined to comment, and a spokeswoman for Australia-based Westfield didn’t return a call. Westfield has interests in and operates one of the world’s largest shopping center portfolios valued in excess of $58 billion with 119 properties in Australia, New Zealand, the United States and the United Kingdom.
Real estate experts said it made sense for the Port to focus on the retail portion of the site now that commercial tenant interest in the buildings is growing. Last month, the Port signed a 1 million-square-foot deal with Cond´ Nast for 1 World Trade Center. Meanwhile, published reports said Swiss financial giant UBS was considering moving into one of Mr. Silverstein’s towers.
Additionally, the Port doesn’t want to lose any significant retail tenants to its neighbor across West Street, the World Financial Center. There, owner Brookfield Office Properties plans a $250 million renovation of the retail space, which is slated to begin in October and run through 2013.
Prior to Sept. 11, 2001, Westfield had net leased the World Trade Center retail components, one of the highest-grossing shopping areas in the nation, which consisted of 427,000 square feet. In December 2003, to accelerate the rebuilding at the World Trade Center site, the Port acquired the retail net lease from Westfield.