The Center Holds

 

Tell me about the enhancements.

When the World Financial Center was developed in the early ’80s, the major emphasis was on the office towers and not the retail spaces. So in addition, the major point of entry to the World Financial Center was through a bridge connected to the World Trade Center 32 feet above sea level. That’s gone. The connection will now be below grade. So the [Financial] Center really needs to be redeveloped in light of that reality, and the focus needs to sort of change; and we’re in the process of planning that now, reconfiguring the retail space—because I don’t think there was a lot of thought in the early ’80s given to how the retail would interact with the office, and with a very different residential population that’s here now than then.

There were very few residential buildings when the [Financial] Center was built. There’s been a major transformation in all of Lower Manhattan and a huge growth in the residential population; so in light of those things, we’re rethinking how the retail center and the public area should work.

 

There’s been a change in the residential character of the area. What about the commercial persona?

There’s been a major shift of focus from the east side and the historical core of Lower Manhattan to the west side. The west side is where the majority of this infrastructure and public amenity money is being spent. You look across the street and you see Goldman Sachs will shortly be occupying their new world headquarters right here adjacent to the World Financial Center. That kind of change has sort of happened in the commercial sector. The market has also shrunk by about 15 percent as a result of the events of 9/11.

But I think the major change has been on the west side, and there’s been a change in complexion of tenants, which I think will continue from financial-services- and government-dominated markets to a more diversified mix of media and entertainment tenants, as well as law firms and professional firms.

 

You’ve been tasked with heading the $4 billion real estate turnaround consortium. Tell me about it?

That’s been upsized to $5 billion, and it’s a small consortium. It’s a small handful of the world’s most sophisticated and well-capitalized institutional investors. And it’s a diverse group coming from different geographic areas. We’re excited about it because these are very savvy, sophisticated investors that are well connected in the markets in which they reside, and we’re out looking for opportunities. We have a long list of things we’re interested in. Not quite ready to announce any transactions, but we’ve been working on a handful of things, and I hope in short order we’ll have more specific things to talk about. It’s more likely to be 2010 announcements.

But the mandate of the consortium is to look for very large transactions requiring a minimum of $500 million of capital, distressed turnaround situations where we can combine the real estate expertise within Brookfield with the restructuring expertise. In the early ’90s, Brookfield’s restructuring group focused primarily on real estate, and that’s how our global real estate franchise was built. But after that, the restructuring group went out and invested in industrial companies, effectively. We’ve now kind of brought the two groups back together again because I think the real estate market and climate is ripe for the two disciplines to work together.

jsederstrom@observer.com

 At Observer.com/commercial: Last week’s Sit-Down with leasing brokers Stephen Siegel, Scott Gottlieb and Michael Laginestra of CB Richard Ellis. Plus, more past Sit-Downs, including developers Jody and Douglas Durst.

 

The Center Holds