by Brendan O’Connor
The new Fulton Street Transit Center, where nine train lines come together beneath the glittering oculus of the so-called “Sky-Reflector Net,” opened a little over a year ago to much fanfare more than a decade after part of it was destroyed in the terrorist attacks of September 11, 2001. “New Yorkers, accustomed to thinking of transit hubs like Penn Station and Times Square as places to suffer through, will find on Monday morning a kind of Crystal Palace, crowned by a dome that funnels daylight two stories below ground,” the New York Times wrote of its reopening. Adjacent to the Fulton Center, and providing a street-level entrance to the station is the nine-story Corbin Building.
This summer, the Landmarks Preservation Commission designated the Corbin Building, constructed from 1888 to 1889, a landmark. But when the MTA announced its plans to build a new transit center, it was in sorry enough shape to come under threat of demolition until, in October 2003, the MTA committed to including the building in its vision. The Corbin Building is named for developer and financier Austin Corbin, who died shortly after a violent carriage accident at his house in New Hampshire and is best known now for his management and stewardship of the Long Island Railroad. It was designed by Frances Hatch Kimball, who, in a 1917 story noting his declaration of bankruptcy, the Times described, possibly with some irony, as the “’Father of the Skyscraper’ and Designer of Notable Buildings.” Ultimately, the Corbin Building’s restoration accounted for over $67 million of the $1.5 billion transit center budget.
Having been restored, the Corbin Building now offered some thirty-eight thousand square feet of empty commercial space in downtown Manhattan, right next door to one of the city’s biggest transit hubs, and just down the street from the new World Trade Center. But the MTA is not (necessarily) in the business of building management, and in 2012 it issued a request for proposals, inviting private developers to submit plans for how they would put that space to use, as well as another thirty-thousand square feet of commercial space in the transit center itself.
In December 2013, the MTA announced that an Australian company called the Westfield Group had been chosen as the master lessee. (Last year, the Westfield Group restructured into two, independent companies — the Westfield Corporation now runs things outside of Australia and New Zealand.) About a year later, in the first quarter of financial year 2015 (just around the time that the new Fulton Street Transit Center opened), Westfield leased the Corbin Building to WeWork, a co-working startup based in New York. WeWork signed a fifteen-year lease for thirty-eight thousand square feet across all nine floors. WeWork does not have to pay rent for the first eleven months. This isn’t unusual for transaction of this size, but it does fit into WeWork’s larger business strategy — recently illuminated by both The Information and BuzzFeed — of pushing off expenses as far into the future as possible, while betting, with its $10 billion valuation, that it can attract sufficient membership to eventually meet those (fixed) costs. After the first eleven months, its rent is $50 per square foot for the first five years, $55 for the next five years, and $60 for the next. The net effective rent, then, over the course of the fifteen-year lease, is $51.74 per square foot — a few dollars higher than the average effective rent in the area. (A pretty good deal for the Westfield Corporation, then!) WeWork has heavily invested in the area around Fulton Center: It already has office space at 222 Broadway, and, in 2013, WeWork co-founder Adam Neumann acquired the rights to buy twenty-five floors in the Woolworth Building, at 233 Broadway, for $68 million.
In its development proposal, submitted in response to the MTA’s 2012 RFP, and which I obtained by a FOIL request, the Westfield Group said that it would lease the first three levels of the Corbin Building to retailers and the remaining six as office space, at a rate of two floors per year, starting in 2014. “Therefore, based on current Lower Manhattan office market conditions, we have identified 2017 as our stabilized year (fully leased),” the proposal reads. It would seem things are ahead of schedule.
The first three floors were primarily to be used for luxury women’s accessories, Westfield proposed: “Under Westfield’s plan, this space will be utilized for one or up to three signature specialty retailers who will hold a very special Broadway address and truly unique space.” The office space, meanwhile, was envisioned as “a home to a vibrant mix of ambitious technology firms, media companies, small financial institutions and boutique architectural and law firms,” according to the development proposal. “Such organizations seek a distinct address and Corbin’s historic jewel-box building clearly presents that opportunity. This is where maturing companies will converge to take advantage of a rare state-of-the-art office building with twenty-four seven (24/7) operational capabilities and direct access to major public transportation lines. The unique loft-like setting with its high ceilings and natural light, coupled with connections to great dining options within the Fulton Center, will create one of the most desirable small-user office spaces in Lower Manhattan.”
Leasing the office space to WeWork is not exactly a departure from this plan, as it is conceivable that WeWork, which largely specializes in subletting over-priced and over-amenitized office space to over-valued startups, could bring in a “vibrant mix” of tenants. What’s less clear is whether WeWork is going to get into retail, or whether that part of the plan has been abandoned. In May, the Tribeca Citizen reported that WeWork applied to Community Board 1 for several liquor licenses under several different LLCs: at the Corbin Building, as WeWork Fulton Center LLC; at 110 Wall Street — where its secretive WeLive project is being explored — as WW Service LLC and The Mailroom LLC; and at 85 Broad Street, as WeWork Social Club LLC. The party never stops. Through a spokesperson, WeWork declined to comment, as it always does. The MTA, through a spokesperson, referred questions about the lease to Westfield, which, through a spokesperson, also declined to comment.
Westfield is a ubiquitous presence in the post-9/11, downtown cityscape. In addition to being awarded control of the retail and commercial space of the sprawling Fulton Center, Westfield also paid the Port Authority of New York and New Jersey $800 million for full control of retail development at the $3.7 billion World Trade Center Transportation Hub, which has been repeatedly delayed by water leaks, and which will also house the $1.4 billion Westfield World Trade Center shopping center, “the most complete retail destination in New York City, the most alluring retail landmark in the world.”
But what Westfield does isn’t just about bringing in retailers and restaurants: It is about creating Dynamic Brand Experiences From Morning Till Night: “Conceived as a high-traffic hub of connectivity, Fulton Center moves commuters, residents, and tourists seamlessly throughout major subway lines and the city — creating targeted opportunities for brand engagements day and night.” What differentiates Westfield from other developers, according to its proposal to the MTA, is “its ability to connect consumers with the best brands, creating communications that lead to a relationship.” Westfield is committed to “delivering one-of-a-kind value propositions by creating ‘Complete Brand Experiences’ and ‘Domination Packages’ allowing brands to govern an entire visual landscape with style and sophistication.”
As always, the MTA’s decision to grant Westfield the master lease at Fulton Center, and the Port Authority’s decision to grant them control of retail at the World Trade Center, is ultimately about money. “We expect to generate enough revenue to maintain the whole complex,” the president of MTA’s Capital Construction division, Michael Horodniceanu, told the Times after the RFP went out. “It would be interesting if we could get a bank as the anchor tenant.” (Austin Corbin’s Corbin Banking Company was the ground floor’s original occupant.) Westfield’s play is to leverage the three hundred thousand people who pass through Fulton Center each day and the five hundred thousand people who will pass through the forthcoming World Trade Center transit hub as not just commuters but potential customers, waiting, at each turn taken through the subterranean labyrinth on their way to their jobs — some just up the steps and around the corner, the creators and makers and entrepreneurs filling the Corbin Building — to be sold something.
Photo by MTA