From the December issue: Westfield’s World Trade Center complex may have gotten off to a wobbly start, but Lower Manhattan’s retail scene appears to finally be finding its footing. Brookfield Place’s $250 million revamp brought in luxury retailers like Hermes and Burberry, as well as a food hall that quickly became a favorite of local families. Westfield World Trade Center is now fully leased, according to a spokesperson, and Pier 17’s new 300,000-square-foot retail space is slated to open next year. Meanwhile, the area’s demographics have changed — decades of residential conversions and the recent wave of construction have established a critical mass of younger, well-to-do residents. The population has doubled since 2000, and a third of families in the area earn $200,000 or more, according to the New York State Comptroller. And financial services, once the district’s defining industry, now accounts for only 34 percent of total jobs in the area, compared to 56 percent in 2000. With that new demographic in mind, Whole Foods is set to open a new store at One Wall Street in 2018. “It’s a big deal,” said Susan Kurland, executive vice president and co-head of global retail services at Savills Studley [TRDataCustom]. And it’s not just families and office workers who are driving the retail scene — the district has seen a huge influx of tourists, with the WTC memorial bringing 14 million visitors to the area annually. The greater diversity Downtown has extended the shopping day, broadened demand, and created a unique retail mix distinct from Soho or Tribeca, according to industry observers. “FiDi stands on its own,” said Lee Block, executive vice president at Winick Realty Group. “It has its own daytime workforce population, its own residential population, and retail coming in to serve that population.”
For our second web installment, we turn to Robin Abrams of Lansco and Lee Block of Winick Realty.
Robin Abrams
Robin Abrams
Vice chair and principal, the Lansco Corporation
How do you explain the pullback from tenants at Westfield?
Some of the tenants that were reported to have backed out, like Bebe, True Religion, Dune and Fika, have changing business models and are not doing any new stores in New York City, or perhaps anywhere, as they rationalize their retail portfolios. Others may have been put off by the rent, the construction costs and the challenges of building a store at the site, with union labor and other constraints.
Should there be concerns about the luxury retail market becoming oversaturated?
Luxury sales are still relatively strong, and are fueled in part by tourists. Brookfield Place will be more of a destination because it consists of a more upscale co-tenancy. WTC has a tenant mix that will appeal to a larger audience: tourists, office workers and area residents. The population Downtown consists of many professionals working in the financial sector who shop luxury and fashion. There are a slew of people living and/or working Downtown that do not shop Uptown, but they will still shop for and buy luxury and fashion items, whether that’s jewelry, shoes or apparel.
What was behind the huge price jump in retail asking rents?
The price jump was due to high-profile Retail Space Coming Available On Broadway. Earlier reports included space that was more difficult, with less visibility or narrow layouts. Now there are some great options available and the pricing reflects that.
What impact will the scheduled 2018 opening of Whole Foods at One Wall Street have on the area?
Traditionally, there was not enough of a residential base for a large supermarket to lease a big location and support the rent. Whole Foods had begun opening smaller locations in urban settings that cater to a mixed population, including office workers. The company is now more willing to be creative and flexible with regard to layout, operating, loading and deliveries than when they first entered the NYC market.
What about the opening of the new Pier 17, slated for 2017?
Putting fabulous food options there is a magnificent idea. Not unlike Related’s Time Warner Center or Hudson Yards, the restaurant options will set the tone for the rest of the retail project. People will go there to dine, with valet drop-off. And let’s not forget this is on the water with water views in three directions. However, keeping people in the vicinity will be the challenge.
What are some of the most surprising trends you’ve observed in the retail scene?
The food hall concept — the upscale answer to The Food Court — which exploded and seems to have no end in sight. This trend has taken [away] some of the opportunities for sit-down restaurants to flourish in the Financial District.
Lee Block
Lee Block
Executive vice president, Winick Realty Group
Between Westfield and Brookfield Place, should there be concerns about the luxury retail market becoming oversaturated?
I don’t think there is an oversaturation. The demographics Downtown support what these retailers typically look for: extremely high population density, very high average incomes for households, as well as well above average workers’ incomes. From Century 21 to Tiffany and Hermes, there is a place for everyone to prosper in Lower Manhattan.
What was behind the huge price jump that REBNY reported last spring, and where do you see rents going six months and a year from now?
A lot of new prime, prime space has come on the market lately, and that has affected average pricing. And it wouldn’t surprise me if prices kept going up in the best corridors Downtown as space is absorbed and there is less supply. The corner of Wall Street and Broad Street acts as a pseudo-Times Square for Lower Manhattan. The WTC is a very busy area of Downtown as well. Meanwhile, secondary cross streets, like Fulton Street,John Street, Maiden Lane, are incredibly strong compared to years back. Retailers are leaving their spaces and being replaced with newer, exciting, unique types of retailers.
How could FiDi’s retail landscape be improved?
Dinner options in the neighborhood are still extremely limited.
What challenges remain for bringing in basic retail amenities like supermarkets?
The neighborhood has been serviced, just under-serviced. The infrastructure Downtown has been a challenge for any full-service supermarket to enter the market. The buildings — many of which are landmarked — on older, narrow streets were not built for that kind of an operation.