Jones Lang LaSalle

SELLING SALES SPACE ON WALL ST
Peter Slatin

Could a lease by one of the world's high-fashion retailers provide the long-awaited key to unlocking Wall Street's perennial retail freeze, and beyond that, to thawing out the district's commercial cold spell?

Years before the attacks of 9/11 destroyed the popular retail concourse at the World Trade Center, boosters of downtown Manhattan had pushed hard, but with little success, to bring better, bigger and more exciting stores to the Financial District. The scarcity of restaurants and high-quality shopping outlets hurt both office and residential growth. As financial services firms migrated to Midtown Manhattan and to the World Financial Center, with its self-contained restaurants and shopping, the 9-to-5 quality of street life has been exacerbated by the absence of residents in the historic Wall Street core. The non-shopping environment has been a major obstacle to transforming the area into a 24/7 urban CBD.


Artist rendering of 23 Wall Street

There is still no clear path to realizing that dream, but signs continue to emerge that it is getting closer. Hermes has signed a long-term, 8,000-square-foot lease at 15 Broad Street, developer Shaya Boymelgreen's condo project currently in construction across from the New York Stock Exchange; Boymelgreen also acquired 23 Wall Street, the adjoining building, when he bought 15 Braod in 2003. Hermes no doubt likes the proximity to bonus-winning Wall Streeters at a discount (compared with 57th Street) rent of $125 a square foot.

Hermes joins some other nearby newcomers, notably steakhouse Bobby Van's at 25 Broad and a BMW showroom at 67 Wall; a financial museum is also coming to 48 Wall. And with Hermes in place, Boymelgreen may have more success monetizing the rest of his investment on the rest of his parcel: the 200,000-square-foot, six-level 23 Wall Street. There, Boymelgreen is hoping to create what could become a central retail hub for the Financial District. According to his broker, Alice DiMarzio of Newmark Knight Frank, Boymelgreen wants to see the space built out as a high-end indoor mall with a European flair, including a salon and spa on the top three levels. The building's rooftop will serve as a garden for residents of Downtown, the adjoining condo at 15 Broad designed by Phillippe Starck.

Another option for 23 Wall is a high-end boutique hotel, and that is what is drawing the most interest. Buyers are also watching sales at the 106-unit Witkoff-Cipriani condominium venture barely a block east at 55 Wall Street. Nearly half of those units have been sold.

Boymelgreen may not have to deal with the headache of retail development, however: interest from buyers in the property has increased, even as brokers and hoteliers who turned their noses up at downtown in recent years have begun to have second thoughts, says DiMarzio. Boymelgreen paid $100 million for the two-building parcel in 2003 and would easily make his money back on a sale of 23 Wall, which is expected to sell for about $115 million.

George Keller, a broker with Cushman & Wakefield's Lower Manhattan office, says that buyers have been "kicking the tires" at 23 Wall but may still be waiting for the district to reach a "critical mass" before putting down hard cash. Like many, Keller believes retail will flourish downtown. "This is a difficult piece of space," he says. "But it's a great location and a great looking building."

DiMarzio, who was involved in the sale to Boymelgreen and has worked on the building since, says that both interest in the building and its valuation have grown, and that the Hermes deal has raised both to new levels. In the immediate arc of 23 Wall, Boymelgreen also owns 14 Wall Street, which remains an office building, and 20 Pine Street, which he is developing as a condominium, barely a block away.