All the developments, changes and controversy surrounding the rebuilding of the World Trade Center have generated a considerable amount of ink in the local and national media. As one of the most emotional and comprehensive redevelopment projects in the country’s history, it deserves the attention and scrutiny it has garnered. But one aspect of it all that hasn’t generated nearly as much coverage is the future of retail in the overall scheme. This lack of clarity is, in turn, causing national retailers to hesitate to commit to the area.
One of the primary reasons for this hesitancy is pure practicality- while there will undoubtedly be numerous retail opportunities in and around the World Trade Center site, most retailers are adopting a wait-and-see stance, looking for those factors that will help them better determine their chances of long-term success. However, there are more definite answers to many of those questions than meet the eye:
What type of retail will dominate the area?
Because Westfield has removed itself from the retail portion of the World Trade Center project, it’s becoming increasingly likely that retail in the area won’t follow an urban mall model but will be predominantly street level and below ground (as part of the underground concourses that will connect the WTC site and surrounding area).
How will the development of transportation affect Lower Manhattan retail?
As part of the construction of the transit hub at Fulton and Broadway, a number of the surrounding properties will likely be redeveloped, presenting opportunities for retailers. The initial phase of the Fulton/Broadway hub will open in mid-2006, with completion in 2007. The Lower Manhattan Development Corporation and others have also advocated a revitalized Fulton corridor that would essentially link the WTC site with areas all the way to the South Street Seaport, which would be a significant opportunity for retailers.
What about residential development?
A number of new residential projects are under development in the area, which will bring approximately 1,400 new units in 2004 and over 3,000 in 2005. This will create a more retail-friendly, around-the-clock environment that is likely to grow as the area continues to revitalize and redevelop.
Other national retailers aren’t committing to Lower Manhattan, why should I?
A handful of major national retailers have already opened or made a commitment to the area. These include Banana Republic, which recently announced it will open a store in the World Financial Center; Borders, which replaced its highly successful WTC store with a newly-opened location at 100 Broadway; and Ann Taylor Loft and Nine West, which recently opened at 2 Broadway. Better yet, all three of those that have opened are doing well – Borders has said it is exceeding sales expectations at 100 Broadway and Ann Taylor Loft and Nine West are reporting sales in excess of $900 per square foot and $700 per square foot, respectively.
Another significant factor affecting the future of Lower Manhattan retail is that all the milestones set forth in Governor Pataki’s rebuilding timeline are being met and funding is being secured, creating a much more certain and stable environment for retailers considering a long-term commitment than anyone anticipated at this point. The opening of the WTC PATH station is an important early example of this.
Of course, the new retail market downtown is still taking shape. But it’s important for the many retailers who are considering the area to know that, while many architectural and design issues remain unresolved, there is far more certainty and opportunity – now and in the future – than has been reported.
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Richard Hodos is the president of Madison HGCD, a commercial real estate brokerage.