NEW YORK, Sept 24 (Reuters) - Authorities agreed on Thursday to slash space leased at New York’s One World Trade Center by a club dedicated to helping Chinese businesses expand their U.S. 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 approved a request by China Center New York LLC to amend a lease it signed in 2009 for more than four floors of space to just the 89th floor of the 104-story building, the tallest in the Western Hemisphere at 1,776 feet (541 m) including its spire.
The new 20-year lease by China Center, a unit of China’s Vantone Holdings Co. Ltd., for about $72.8 million in anticipated aggregate rent is for about 35,000 square feet, a sharp drop from an initially planned 190,810 square feet, according to the Port Authority, the building’s majority owner.
The China Center bills itself as a club where China’s elite can connect with global peers. The Durst Organization, which has a $100 million investment in the building it manages and oversees leasing, has called China Center a major tenant along with publisher Conde Nast and several U.S. federal agencies.
A Durst spokesman said China Center’s business model changed and it was unable to fulfill its original commitment.
China will continue its robust U.S. 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 pounds ($153 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 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 Center lease starts at $85 a square foot and increases to more than $100 a square foot, the highest base rent for a new lease in 2015 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 Center, bringing to 72 percent the net operating income projected for the building in 2020, Foye said.
Reporting by Herbert Lash; Editing by Alan Crosby