Wal-Mart Update

Crain's Insider (subs.) has more on the Wal-Mart in Brooklyn saga: "News that Walmart is considering the Related Cos.-owned Gateway II shopping center reprises the battle between the developer and a retail workers union over the Kingsbridge Armory last year.
Related would relish a little payback to the Retail, Wholesale and Department Store Union, which got the City Council to kill Related's Kingsbridge mall over concerns about wages. Walmart wouldn't need council approval to open at Gateway II, so Related could exact revenge without giving members a chance to comment in any significant manner."

The Insider seems to believe that Related is invulnerable on this move, but consider the following from the Observer about the company's mega-deal on the Far West Side: "The infrastructure costs are tremendous (up to $1 billion for a platform over each of the two sections of the rail yards), and it's far from a foregone conclusion that big tenants will once again be willing to relocate far from midtown Manhattan. After all, there's now a lot of government-backed new vacant office space set to rise in Lower Manhattan, and Related wants a large office, retail, and hotel tenant committed before it starts on the platform. Even if the triggers aren't hit, the M.T.A. can also call in the deal whenever it wants, giving Related 90 days to close and start its rent payments. Of course, if Related decided to bail on the project at that point, the M.T.A. would have to start over, opening up bidding for another developer.

Related is a politically connected developer operating in a political environment-and we haven't even mentioned that the company has thrown in its hat over at Willets Point. And while we're talking about that project, shouldn't we point out that the city council also rezoned that land with no assurances about which tenants will eventually locate at the proposed 1.2 million square foot mall slated for the development's footprint? The council has to exercise better oversight-and giving the city a blank check on a development before a developer or a project plan has been put forth, is simply bad policy.

But for its part, Crain's feels that the council's actions on the Kingsbridge Armory has attenuated its normal leverage over development: "But the issue is less about revenge than about logic. To stay on good terms with organized labor, developers have refrained from bringing Walmart to the city even when council approval was not required. The goodwill came in handy when they brought other projects to the council. But Kingsbridge was one of those other projects. By rejecting it, the council—paradoxically—lost some leverage. Developers, having gotten the message the council won't stomach retail projects without “living wage” guarantees, now seem to have nothing to lose by courting Walmart."

This, in our view, is simply silly. The living wage fight at the Armory is likely to lead to a city wide bill that creates wage standards. But even if it doesn't, the council's sway over development projects is still alive and well-and you beard the lion at your own risk. And taking on Wal-Mart as a tenant is a serious beard pull for any developer. We'll give Stu Appelbaum the last word on this: "Labor's dislike of Walmart is visceral. RWDSU promised a fight in an open letter yesterday from President Stu Appelbaum. “Yo Walmart: Fuhgeddaboudit!” he wrote. “New York City does not want you here.”