Leases  ·  Retail

Westfield’s Plan to Exit Fulton Street Station Met With Lawsuit From MTA

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Unibail-Rodamco-Westfield is losing its penchant for Lower Manhattan retail as the mall operator plans to board the next train out of the Fulton Street subway station.

Westfield told the Metropolitan Transportation Authority (MTA) earlier this month that it was planning an exit from its 20-year master lease of the retail component of the transit hub, sparking a lawsuit in which the MTA wants to keep the operator, Bloomberg first reported.

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The station’s retail mall is known as the Fulton Center Stores. Westfield would be exiting halfway through its lease term since signing in December 2013. The MTA’s lawsuit aims to keep them in place.

”We are expecting a termination proposal from the MTA this week,” a letter dated Feb. 12 from a Westfield attorney to the MTA read. “However, if a negotiated surrender is not completed as soon as possible, Westfield will be forced to protect its interests by ceasing its operations at Fulton Center and working in good faith with the MTA to transition the retail operations at Fulton Center to the MTA or to a third party.”

The shopping center opened in November 2014 to help serve as a revenue stream for the cash-strapped MTA. In its lawsuit against Westfield, MTA argued that the agency and the New York City Transit Authority — which is run by the MTA — would suffer a major financial loss that would possibly impact commuters if Westfield pulls out.

“Westfield’s unauthorized cessation of its operations and termination of the lease would adversely affect not only the retail establishments in Fulton Center that Westfield subleased, but also members of the transit public who are customers of these retail outlets,” the complaint read. “Westfield’s improper termination of the Lease also would adversely impact the goodwill that NYCTA has developed with the public by having made these retail establishments available to transit users.”

It could be another setback to the MTA’s attempts at harvesting additional cash from straphangers by offering retail amenities in subway and train stations.

In February 2023, the MTA opened Grand Central Madison, the corridor that brought Long Island Rail Road riders from Queens into Grand Central Terminal via the program known as East Side Access.

Within the plan were 25 retail spaces and another 25,000 square feet which could be capitalized on through a master lease. But a year later, an entity interested in subleasing the retail portion has yet to come forward, and the MTA is planning to release a request for proposals in March, according to a spokesperson. 

This wouldn’t be the only Lower Manhattan transit-oriented retail hub Westfield wants to get out of.

In August 2022, Westfield announced plans to sell off the Westfield World Trade Center mall inside the Financial District transit hub, along with the 1.3 million square-foot Westfield Century City in Los Angeles, in order to focus on European markets.

It’s unclear if the move away from Fulton Street is in connection with that strategy or the status of a sale of the World Trade Center mall.

A spokesperson for Westfield did not immediately respond to a request for comment.

Mark Hallum can be reached at mhallum@commercialobserver.com.