China Centre amends World Trade Centre lease from four floors to one
Club's move feared by some as an indication of a slowdown in overseas investment from China
Authorities have agreed to slash space leased at New York's One World Trade Centre by a club dedicated to helping Chinese businesses expand their US presence, an accord some feared may portend a slowdown in overseas investment from China.
The board of the Port Authority of New York and New Jersey on Thursday approved a request by China Centre New York to amend a lease it signed in 2009 for more than four floors of space to just the 89th floor of the 104-storey building, the tallest in the western hemisphere at 541 metres including its spire.
The new 20-year lease by China Centre, a unit of China's Vantone Holdings, for about US$72.8 million in anticipated aggregate rent is for about 35,000 square feet, a sharp drop from an initially planned 190,810 sq ft, according to the Port Authority, the building's majority owner.
The China Centre bills itself as a club where China's elite can connect with global peers. The Durst Organisation, which has a US$100 million investment in the building it manages and oversees leasing, has called China Centre a major tenant along with publisher Conde Nast and several US federal agencies.
A Durst spokesman said China Centre's business model had changed and it was unable to fulfil its original commitment.
China will continue its robust US investment activity, said Brian Ward, president of Capital Markets and Investment Services in the Americas for Colliers International, a global real estate company.
However, two major London real estate deals for more than £100 million "blew up" in the last 10 days with Chinese buyers, both of which Colliers thought were rock solid, he said. "The question remains whether this is a short-term blip or a longer-term change," Ward said.
According to JLL, another large real estate firm with a presence in China, recent volatility in the Chinese markets will make investors more focused on investing abroad as a safe haven, a spokeswoman for the Chicago-based company said.
The new China Centre lease starts at US$85 per square foot and increases to more than US$100 per square foot, the highest base rent for a new lease this year for downtown Manhattan, said Pat Foye, executive director of the Port Authority.
Moody's Investors Service agreed last week to lease two floors at One World Trade Centre, bringing to 72 per cent the net operating income projected for the building in 2020, Foye said.