New Columbus Centre will be tourists' Mecca

Real Estate Weekly, Sept 20, 2000 by Elaine Misonzhnik

The soon-to-be-built Columbus Centre at Columbus Circle is bound to become the new symbol of New York, according to Steven Ross, the chairman and CEO of the Related Companies and the man responsible for the current re-development of the site. At least, that is how Ross hopes to realize the financial returns on his investment -- through marketing the property as a must-see tourist attraction stop.

"We are going to be broadcasting from the there twenty-four hours a day, and we are going to broadcast the building itself around the world," Ross said at the Real Estate Lenders Association breakfast meeting this week. "Time Warner is going to adopt it as their logo."

AOL Time Warner is going to be the main tenant at the property, which is scheduled for completion in the fall of 2003. The remaining space will be occupied by the Mandarin Oriental five-star hotel, the Jazz at Lincoln Center entertainment facility, and numerous luxury retails with world-famous names.

"We are setting this up to be a luxury project," Ross said. "What we are looking to do is bring three- and four-star restaurants at about 150 feet above the Park -- with the glass walls there, the views are going to be incredible. In addition, we are also trying to get luxury retailers to fill the lower levels and the ground floor. Right now, we have about three bidders, willing to pay $300 SF rents."

According to Ross, smart retailers will realize that occupancy at Columbus Centre will give an easily recognizable ring to their names. In fact, the branding possibility of the address was the deciding factor in Jack Warner's decision to relocate his company's headquarters to the property.

"When I approached Jack Warner, he said 'We don't need the space,'" Ross recalled. "But I explained to him that this was not about space. His company was not really represented at their previous location. With the move to Columbus Circle, every one would know who they were."

Ross, who had to get a $1.3 billion loan from the Commercial Mortgage Corporation to start construction on the project, has visions of it transforming into a New York City "place to be." "There's a tremendous branding opportunity that exists here," he said. "While the rents may seem a little high, you have to realize that there is no other project like this in New York."

The Related Companies, along with their partners Apollo Real Estate Advisors, and The Palladium Company, is currently concerned with leasing up the 364,000 SF of retail space, but as far as the Columbus Center condos and hotel are concerned, Ross feels no sense of anxiety. "The interest in the condos has been incredible," he said, "and we will start selling them in January. As far as the hotel is concerned, we are putting in every amenity that you could possibly think of, including a spa and a ballroom, so combined with the location and with the incredible views, I think Mandarin Oriental will be competitive with the St. Regis hotel."

According to Ross, his company solved the financing dilemma associated with the project, by breaking the property down into 4 different condo units, making the tenants pay for their share of the construction cost. "Time Warner is taking out their portion, which represents about one third of the total cost," Ross said. "But we are also looking at corporate sponsorship -- after all, everyone realizes how important this project is for New York."

In addition, Ross was able to get some of the construction product suppliers lower their costs, so eager were they to put Columbus Center on their resumes. "The glass suppliers are paying for the curtain wall," he said, "just to be associated with our project. Our biggest challenge right now is making the creditors realize the tremendous potential that exists here."