In 2004, I was fortunate to go on a group visit with the Wharton MBA Real Estate Club to The Related Companies just after they had completed construction of their mega mixed-use development in New York, The Time Warner Center. We were so lucky as to have Jeff Blau, Related’s President host us and tell us about the project.
While a lot has changed in the real estate market in the last 7 years, I have not forgotten (and will never forget) how Jeff answered my question, which was “What is the biggest challenge about mixed-use development?” His response centered around the fact that all of the product types have to hit at once — retail, hotel, office and condominium — in order for the project’s overall performance and investor returns to not be damaged by a single use’s slump in the market cycle.
I think that we can all appreciate how difficult it is to have one product type succeed from a timing and absorption perspective. When you extrapolate out to four asset types, you go from losing a little sleep and a little hair, to a lot of sleep and a lot of hair. (Although Jeff still had a full head at the time, as did I.)
What did you learn from the successful completion of the Time Warner Center?