Ric Clark Has Had Success With Brookfield Place, but the Far West Side Is Also Ready for a Taste
Lauren Elkies Schram March 16, 2016, 11:45 a.m.
Lower Manhattan is Ric Clark’s backyard.
Whether he’s working out of his office at 250 Vesey Street in Lower Manhattan or tooling around on the weekend, he’s seldom above 14th Street.
Downtown “is just so exciting,” the Tribeca resident told Commercial Observer. He pointed to the opening of great restaurants, the $20 billion investment in infrastructure and the ample green space (18 percent of the area below Chambers Street versus only 2 percent between 42nd and 57th Streets).
As a senior managing partner and the chairman of Brookfield Property Partners as well as the chief executive officer of Brookfield Properties, the office and multifamily subsidiary of the business, Mr. Clark oversees the company’s 19 million square feet of existing office space (plus millions of square feet that are under construction) as well as the the company’s existing 4,000 apartments and those under development—which, of course, go well beyond Downtown Manhattan. Just in New York alone, the company is erecting an 844-unit residential building at the 5.4-million-square-foot mixed-use Manhattan West and two residential towers in Greenpoint, Brooklyn, at Greenpoint Landing, a 22-acre development site along the East River.
But one of the highlights of the $140 billion global portfolio is the Brookfield Place model, which locals have experienced firsthand in Lower Manhattan with the 8.5-million-square-foot office complex formerly known as the World Financial Center. (His office is in one of the buildings it comprises.)
CO caught up with the 57-year-old divorced father of two (a 24-year-old daughter who lives in the city and a 22-year-old daughter who dwells in North Carolina) last week—almost a year after Brookfield Place New York opened.
Commercial Observer: In terms of retail sales, how are they going at Brookfield Place?
Mr. Clark: Sales are fine, they’re great.
Can you provide any numbers?
We’re not sharing any of that information with the public, but it was a good holiday season. The retailers did very well. We’ve got a few spaces that we’re working to get leased up to complete the leasing. Most concepts I think are right on. Maybe one or two we may have to make some adjustments with at some point. I’m here a lot, as you might imagine, this being one of our important centers and I live a 10-minute walk away. So I’ll come on a Sunday morning at 10 o’clock, and the Winter Garden is packed, and I’ll be working late on a Friday. Or once in a while I’ll be here on a Saturday night, and there’s just a ton of people at all times. The complexion of the people that are here changes—there’s more likely to be young families on a Sunday morning and young professionals on a Friday evening, but there’s always a crowd.
How did you go about curation at Brookfield Place New York?
When this center was built 30 years ago we created an arts and events program to basically enliven the common areas of this place. We’ve expanded that program to do more—and to do more around the world. So we’ve just taken this program to these other centers.
What about in terms of selecting the vendors?
I can’t tell you who we worked with, but we worked with a lot of retail consultants. We planned this project for many, many years before we stuck a shovel in the ground and basically started to redevelop it. And one of the things we wanted to do was create a high-end food hall with great public space as part of it. What’s really interesting now is we look around the world, and there are a lot of companies that are actually doing food halls themselves. I kind of feel like we are a little bit ahead of the pack here. Hudson Eats has been incredibly successful, as has Le District.
What are you most excited about and what are you most afraid about with the upcoming opening of Westfield World Trade Center?
I’m not really afraid of anything. Westfield is a great operator of retail centers, and I think these centers are going to feed off each other. And I think if you were to talk to Peter Lowy [co-CEO of mall company Westfield Group] he’d tell you the same thing. Our successes are theirs and vice versa. Both of our centers are small compared to a typical mall.
What’s a typical mall size?
I don’t know—a million-plus square feet. The retail component of our center is 300,000 square feet. Westfield is 350,000 square feet.
Do you think the public will perceive Brookfield Place and Westfield WTC as one giant mall?
There will be two separate centers, but I think there will be a lot of synergies between them. People often say to me, “Are you upset you lost this tenant to the World Trade Center or Hudson Yards?” And the answer is no. Their success is ours and vice versa. We’re predominantly leased here at Brookfield Place, and I think it’s been helpful to the leasing efforts across the street.
How much square footage do you have available for lease at Brookfield Place?
It’s an 8.5-million-square-foot complex, and we’re 95 percent leased. We own 7.5 million of that 8.5 million and American Express owns a million feet themselves and occupies it as part of the center. They own half of the third tower here.
You repurposed Brookfield Place for the technology, advertising, media and information, or TAMI, sector.
Yes. We basically reimagined it for those tenants that were currently driving the job growth in New York City. At the time we started the renovation, the financial services industry was in reduction mode, not in growth mode, and so we rebranded the center Brookfield Place, our premium brand, but it would have been hard to attract a TAMI tenant, or a creative tenant, to the World Financial Center, to be honest.
What’s the competition for media tenants between Brookfield Place and the World Trade Center?
What’s the difference between your offices and the ones at the World Trade Center?
Both are great projects. We’ve got a redeveloped project up and running and any disruption is behind us. They have a little ways to go.
How often do you work out of this office?
We have a big global business. This week is a good example. I worked here Monday, Tuesday, was in London Wednesday, Thursday and back here on Friday.
Where do you eat lunch when you’re in New York City?
I almost always eat lunch here [in Brookfield Place]. This week I just went down and grabbed something from Hudson Eats.
I think today was Dos Toros. This is getting awfully personal, Lauren [laughs].
At Manhattan West what are you focusing on in terms of curation?
We’re in the planning phase on Manhattan West. We’ve got a little bit of time so we haven’t yet come up with a final plan. The proximity to the most heavily trafficked train station in the Western Hemisphere and Madison Square Garden and all the new residents and workers in the Hudson Yards-Manhattan West district [means] there will be a lot of demand for food and beverage. If you ever want to go to an event there [now] there are only a couple of places to go [to eat]. We’re studying it, but my gut suggests there’s a real good opportunity for high-quality food and beverage offerings.
How do Brookfield’s different divisions work together?
We’re basically a diversified business both globally and by sector. I’m chairman of the real estate group for Brookfield. The chief executive officer is a guy named Brian Kingston, and the way we split up the world is I look after office and multifamily, and he looks after everything else.
Does retail interact with hotel, hotel interact with office, office interact with renewable energy, etc.?
If there are business reasons to interact, then absolutely. Like the retail center here at Brookfield Place is owned and managed and operated by our operating division. But as you can imagine, there’s a lot of great expertise that resides within General Growth Properties, so there was a high degree of collaboration with them as we were leasing up the center.
When Brookfield retail specialists Ed Hogan and Mark Kostic left, you brought in GGP, right?
GGP for a while came in and helped us get it open and up and running.
Is [Brookfield Property Partners parent company] Brookfield Asset Management buying the rest of GGP [which you already own nearly 40 percent of] as was reported and then refuted?
I’m not commenting.
It was reported that in January you put in an all-cash bid at $17 a share for the rest of mall owner Rouse’s stock after already owning one third of the company’s stock. That was for $657 million, right? Did you close on the purchase?
We have not closed on that. It’s a couple of months out. We ended up upping that number.
What is your retail strategy with buying Rouse given the portfolio’s lack of retail strength?
They are high-quality malls in secondary cities. Those malls are out of favor with the public mall company sector. We think there’s a lot you can do with acquiring those malls—reposition them, monetize them. We feel these are probably better owned in a private equity format.
Are you replacing Dennis Friedrich [the CEO of Brookfield’s global office division who resigned in January]?
Not immediately, no.
Who’s handling his workload?
I’m looking after it.
Why did he leave?
Dennis is a talented real estate executive, one of the best. He was looking to do more than we had for him. He will be excellent at whatever he chooses to do next.
Back to the different silos: They do interact, but they mostly don’t need to, correct?
We’re a highly collaborative organization so everybody works together and helps each other for the greater good of all, but one of the things that we have focused on considerably over the past five years is this concept of place-making. We’ve done a lot of research around the group of people that are really driving today’s economy around the world, and it’s the millennials. So, there was a lot of thinking around what makes millennials more productive, what kinds of environments they want. This group works hard, plays hard and wants to switch from one to the other immediately. So with that and other things in mind, we created our premium concept called Brookfield Place. Brookfield Places are mixed-use centers that combine an element of office with retail and in some cases with hotels and/or multifamily apartments. All of them have public spaces that we enliven with our arts and events program. This concept is owned and operated and looked after by our office division, and we have Brookfield Places in New York, Toronto, we’re finishing one in Calgary, finishing the second phase on one in Perth [in Western Australia]. We just broke ground in Dubai, I think in January. We bought Potsdamer Platz in Berlin [a 3-million-square-foot 16-building mixed-use complex for €1.35 billion or $1.51 billion] recently, and sometimes assets are so iconic and they have an iconic name that we’re not changing it to Brookfield Platz—but it has all of the elements of a Brookfield Place. We’ll keep the name, but we intend to redevelop and reimagine this center with this Brookfield Place concept.
And what about at Manhattan West?
At Manhattan West, same thing. It won’t be named Brookfield Place. It’d be a little confusing to the marketplace to have two Brookfield Places. Can you imagine hopping in a cab, “Take me to Brookfield Place,” and you end up in the wrong Brookfield Place?
You think this model works. Why?
We’re trying to create environments that help employers retract and attain top talent. This is working very well for us, and I think very well for our tenants.
How’d you come up with the idea?
The first one was in Toronto. We redeveloped a project that was called BCE Place in Toronto, which was Bell Canada Enterprises’ center. So that was the first one we turned into a Brookfield Place [in 2008].
In October, you acquired a piece of the Greenpoint Landing residential development in Brooklyn from Park Tower Group, and the two of you will develop two high-rise rental buildings at the site. What’s your timeline?
We will break ground on the first tower within the next 30 days or so. The second tower will be about a year behind. There will be 780 units in total. The rents will be two-thirds of what we expect to charge at Manhattan West. [Brookfield is topping out the residential building at Manhattan West soon.]
Do you plan to grow your hotel portfolio?
We’re constantly looking for new hotel investments. A couple of years ago we acquired Thayer Lodging Group [a hotel investment company]. We’ve been using that hotel platform.
What was the last hotel you acquired?
The last one of scale was the Diplomat in Hollywood, Fla., a year and a half or two years ago [for a reported $460 million]. We’ve bought some since. We’re really opportunity-driven.
What are your long-term plans in the Middle East?
Right now, from a real estate perspective, we’re only building a Brookfield Place in Dubai. And from there we will see. It’s called ICD Brookfield Place.
Everybody’s talking about a softening tenants market. What does that mean for Brookfield?
That hasn’t been our experience. We have a good pipeline. We are in discussions with tenants at Manhattan West. We’ve been holding our rents.
What about offering more concessions and greater tenant improvement allowances?
You have been with the firm since 1984. How have you grown in that time?
We have $140 billion in real estate assets. That was $1 billion when I started.
What about you as a person?
I started basically as a financial analyst and did the initial feasibility study for Manhattan West.
Did you think it was feasible?
It didn’t happen until now.