MOVING IN: Who Will (Or Would Want To) Lease Space At 1 World Trade Center?
The first World Trade Center took 34 years to achieve its highest level of occupancy after the Port Authority began clearing lower Manhattan for its construction in March, 1966.
Hopes are high that it won’t take that long for the new World Trade Center to do the same. When the first phase of reconstruction of the 16-acre complex is complete, it’s expected to add at least 10 million square feet to downtown Manhattan. For comparison’s sake, Long Island has 50 million square feet of similar Class A & B office space, and its current average vacancy rate is 11 percent, or about 5 million square feet.
Concerns that a Ground Zero address might be a drawback to a prospective tenant have proven short-sighted. In May of this year the publishing giant, Conde Nast, agreed to lease 1 million square feet of 1 World Trade Center, once known on the drawing boards as the Freedom Tower. It’s already the tallest building in Manhattan and it won’t be completed until 2013. Joining the publisher there will be The China Center, a consortium of Chinese businesses, which has just signed a lease for 200,000 square feet. With those formal leases, only another 1.8 million square feet is still up for grabs.
The Port Authority hopes its new tenants can move into 1 World Trade in 2014. It also is responsible for Tower Five, which has many years to go before it can be leased. Silverstein Properties, Inc., which signed a 99-year lease for the World Trade Center in July 2001 for $3.2 billion, is responsible for Towers Two, Three, Four and Seven. The Port Authority decided in 2006 to move its headquarters to 4 World Trade, which should be ready in 2014, in order to draw other tenants there.
So far, 7 World Trade Center, the first tower to be rebuilt, is now 92 percent leased, according to a source in Silverstein Properties who asked not to be identified because he wasn’t authorized to speak on his company’s behalf. That tower’s big tenant is Moody’s, the bond-rating firm, which recently gave the Port Authority a negative rating because of its revenue problems battling the recession. Tower Two is slated to open in 2016 so “it’s much too early” to discuss leasing, the Silverstein source says; and the same goes for Tower Three, set to open for 2015.
Tower Three will be built to a five-story “podium” level after which construction stops until it gets a signature tenant; and Tower Two will only come to street level, “until the real estate market warrants additional space downtown,” says Port Authority spokesman, Steve Coleman.
Some in Long Island’s real estate industry see “all positives” from businesses taking up space at the rebuilt WTC and no threat from companies out here suddenly deciding to kiss the suburbs goodbye. “It’s definitely going to benefit us with new people living here who will be employed down there,” says David Pennetta, president of the Commercial Industrial Brokers Society of Long Island, and a board member of the Association for a Better Long Island, a developers’ lobbying group. “I don’t see any negative.”