Despite five years of planning, several design contests, a host of insurance lawsuits and innumerable political battles, new retail development in Lower Manhattan since the devastating attacks of Sept. 11 remains scarce.
Most retailers are wary of committing to the area until the developers of the World Trade Center itself have committed to a retail plan. The Port Authority of New York and New Jersey, which controls the site, has promised to build 200,000 square feet of below-grade retail at the commuter rail station on the site and eventually add another 375,000 square feet in the below-grade and ground levels of towers 2, 3 and 4. A formal plan has yet to be made, however.
The mall developer, The Westfield Group, has rights of first offer on the retail development should the Port Authority delegate the retail responsibilities to a third party. Westfield secured those rights for $1 million in 2003. The developer had acquired the leasehold for the existing 427,000 square feet of retail at the World Trade Center in April 2001, at which point the mammoth retail corridor was recording sales in excess of $900 per square foot and saw nearly 200,000 commuters and office workers every day. But Westfield, like the many retailers kicking tires around Lower Manhattan, is still waiting.
“Development at the trade center will spur everything in the area,” said Jeffrey Roseman, executive vice president of Newmark Knight Frank Retail. “But with little movement there, right now it’s stalling retailers from making a deal. Nobody wants to make the wrong move and find out that after the trade center gets built that the traffic or pedestrian pattern has been changed completely.”
There is also little visible progress at the other major retail development site in Lower Manhattan, the South Street Seaport. The site, which General Growth Properties acquired in November 2004 as part of its Rouse Co. merger, currently offers more than 100 shops and some restaurants. There has been some forward movement — the Fulton Fish Market has finally moved to the Bronx, eliminating some of the grime from the area, and General Growth this year opened a New York office to keep a closer eye on the property — but the area remains a somewhat diminished tourist destination, with Abercrombie & Fitch its liveliest retailer.
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According to a spokeswoman for the real estate investment trust, the company is still developing plans for the site, which will be mixed-use with both retail and cultural elements. There is no time line set for when the plans will be announced or when redevelopment will begin.
There is more activity in the region among private developers, who are busy pulling in retailers and growing the shopping base store by store. In spite of the stalled master-planning efforts in Lower Manhattan, retail is still slowly growing, especially near the New York Stock Exchange. Luxury retailer Hermès is expected to open an 8,000-square-foot store at 15 Broad Street in 2007. Tiffany & Co. will open a 7,600-square-foot store at 37 Wall Street, just steps away, later in the same year.
“There is a lot of wealth in the vicinity,” said Roseman, who brokered Tiffany’s deal. “When a kid gets a $250,000 bonus check, places like Tiffany and Hermès are perfect spots to spend some of it.”
There is speculation other luxury retailers, including Bulgari, have been shopping for space in the area, while Nordstrom, which said it expects to open 15 stores in the next three years, has been nosing around as well. Whole Foods is expected to open a 55,000-square-foot store in the neighborhood next year, banking on the booming residential population.
Retail rents are rising, too. According to the Real Estate Board of New York, retail rents ballooned 16.4 percent to the current $85 per square foot from $73 per square foot at the end of 2005, one of the highest growth rates of any area in Manhattan. The Broadway corridor south of Chambers Street, where designer discount behemoth Century 21 and electronics retailer J&R reside, commands the highest rents, rising to $125 per square foot from $111 per square foot at the end of last year.
This sort of business optimism, notwithstanding most retailers’ and developers’ impatience with the bigger-picture plans for Lower Manhattan, is a dramatic improvement from the attitudes of businesses just after Sept. 11, 2001. More than 60 percent of retailers reported severe decreases in sales volume and extreme concern over the lack of customers, according to a survey by the Downtown Alliance in the fourth quarter of that year.