In the ongoing debate over the future of the Port Authority, Wednesday looms as a potential turning point as the PA’s board gathers to vote on the fate of a loan for 3 World Trade Center. With leasing at a near standstill in his 4 WTC (and in the PA’s 1 WTC), Larry Silverstein has once again come to the Port Authority for a multi-billion-dollar loan guarantee for an office building, and for once the Port Authority board is showing signs of fighting back. With politicians, transit advocates and Port Authority reformists watching, Wednesday’s vote could be a monumental one; it will definitely be newsworthy.
The immediate controversy at Ground Zero has come about due to Silverstein’s desire to keep building up. It’s not currently an easy one to fulfill as, according to an article in the Wall Street Journal, the other two WTC buildings — both constructed either with PA money or with PA loans — aren’t exactly filling up. “Neither One World Trade nor 4 World Trade has signed a lease with a private office tenant in nearly three years,” Eliot Brown reported. “Between them, that leaves more than 2.5 million square feet of unleased space—double the size of the Chrysler Building—at a time of contraction of the big banks that are among such buildings’ likelier prospective tenants.”
With an increased attention on the desire to refocus the Port Authority on its transportation mission, Kenneth Lipper, an investment banker on the PA board, has led the charge against another tax giveaway to Silverstein. “We can’t have these peripheral distractions,” he said, calling the construction projects “an inappropriate investment” for the Port Authority.
In a column in yesterday’s Times, Joe Nocera expanded on this concept:
Whether or not building commercial skyscrapers was the right way to rebuild Ground Zero, what can be said for sure is that the Port Authority has shown, yet again, that it doesn’t belong in the real estate business. One World Trade Center is the most expensive high-rise building ever built in America, and it is costing the Port Authority a fortune. Only 55 percent of its 2.6 million square feet has been leased, and most of that is at a significant loss. Meanwhile, 4 World Trade Center, which was developed by Silverstein, has only 60 percent of its space leased. As The Wall Street Journal pointed out recently, between the two buildings, there is more than 2.5 million square feet of unleased space at Ground Zero.
So why in the world would the Port Authority be willing to back another $1.2 billion in loans to help Silverstein build 3 World Trade Center? Yet on Wednesday, that is exactly what the Port Authority board is supposed to vote on. Silverstein needs the loan guarantee for a simple reason: The market is saying that, with all that empty office space, this is not the time to be building another skyscraper downtown…This time, somebody on the board has finally stood up and said, “Enough.” That person is Kenneth Lipper, an investment banker and a former deputy mayor of New York, who was appointed to the Port Authority board last year by Gov. Andrew Cuomo of New York.
“There is simply no reason for the Port Authority to step in,” he told me on Monday. “The private sector is appropriately saying, ‘Not now.’ ” But he also had another objection, one that heralds back to the original purpose of the Port Authority. “Our role is to develop the transportation infrastructure of this region. We have more infrastructure needs than we can finance through our revenue base. As a result, we are triaging necessary transportation improvements to finance what will be an empty building.”
How this ends is anyone’s guess. While Lipper is leading the opposition, some PA board members seem willing to hand over a blank check to Silverstein, and Sheldon Silver, for one, is putting pressure on the board to approve the funding request. Silverstein and his team believe the loan will eventually be paid back down the line when the PA can realize revenues from these new office buildings, but between Ground Zero, Hudson Yards and a potential East Side rezoning effort, it’s not yet clear that all the square footage flooding the market over the next few years will go quickly.
Meanwhile, in the aftermath of the George Washington Bridge scandal, an independent panel has urged the PA to shed its shackles of governor control. PA doings should be public and books transparent. One way to start would be, as Lipper suggests, to refocus on transit and transportation at the expense of another World Trade Center building that may not be all that necessary.
55 comments
It would be fine for PA to be in the real estate business if it did so in self-interest – expand transit, then build densely near new stations to make a profit. That is the Japanese model and it could’ve worked wonderfully for the public if, ironically, the PA could have a profit motive as opposed to a private developer. But by bending over for Silverstein, the PA is neither promoting its mission nor making any friends.
All the PA board has to do is go back and look at the original WTC project to see what a boondoggle this is. Nelson Rockefeller’s 16 acre vanity project took two decades to finally fill up — it was horribly overbuilt in the 1970s, where the state had to step in and provide the tenants for the towers itself just so someone would be working there, and even then the downstairs plaza was a ghost town for most of the day and on weekends (the same held true 40 years earlier for the Empire State Building and its problems finding renters, but that wasn’t put up by a state agency that wasn’t supposed to be in the real estate business).
Giving in to Silverstein would simply be repeating the same mistake over again and expanding downtown office capacity beyond the current market to fill it. And with the PA running short on cash to do the things it’s actually supposed to be doing, paying off the bond debt for 10-20 years on a bunch of buildings that are either mostly-unoccupied or again filled with non-revenue Port Authority and other NYS offices means transportation project funds are going to be sparse for a long time to come.
To be fair downtown/fidi is completely different than back in the 70s. Even on weekends the area is bustling with tourists and residents. So in terms of the plaza/mall/etc. those will be used, and more and more too as the commercial to condo conversion in the area continues to pick up.
Tower 3 is basically is a PR thing. They (Silverstein and the PA) don’t want a half built building sticking out like a sore thumb over there, they want it completed even though it’ll sit empty for a decade or more. Hard to think that Silverstein doesn’t realize that, especially with Hudson Yards going up as well. The question is whether it’s worth valuable transportation dollars to serve that purpose, and the answer is probably no.
The construction of Battery Park City does mean the traffic flow west of the WTC site will be there in a way it wasn’t in the 70s, and the new layout isn’t as high-handed as the original design, where the plaza basically shut out the rest of the neighborhood on three sides, allowing easy access only from Church Street.
But you’re still looking at building above what market forces say should be built today, not only leaving the Port Authority with a shortfall of rent money to repay the construction bonds, but also skewering the downtown office rental market so that other office buildings have to lower their rents to compete with the state-run PANYNJ (and we’re not talking about some small business owner getting a break on a storefront rental here, but big multinational corporations getting sweetheart deals on multiple floors of space from building owners who may not have Sheldon Silver in their corner, as Larry Silverstein does in pushing the WTC 3 project).
That’s not quite what’s happening here though. Silverstein is the developer and he’s going to be paying the PA no matter what for the air rights. He’s covering the risk of having empty spaces and not being able to sign tenants, since ultimately that’s his responsibility.
The PA only owns the portion of the project that’s below ground (which they leased to Westfield for mall development).
Basically PA is guaranteed income from this, as well as decent interest payments on the bonds. The question is whether they should indeed deplete their funds and lend Silverstein the money so they can get Tower 3 built even though there’s no demand for it.
But with Sheldon Silver in his corner, what are the odds that — were Silverstein in future need of bond repayment $$$ for his mostly-empty new buildings — Silver wouldn’t apply similar pressure to the Port Authority to be the guarantor of last resort?
I don’t think Silver’s in his corner… Silver’s just a guy who wants the complex to be built no matter the cost. As the debt owner if Silverstein defaults then I’m sure PA will adequately protect themselves.
“….some PA board members seem willing to hand over a blank check to Silverstein, and Sheldon Silver, for one, is putting pressure on the board to approve the funding request…”
Ahh. Good ole’ Shelly Silver!
I strongly support 3 WTC and the reason are demand and available Real Estate are quite different than years ago. 1: There is a scarcity of land particularly in Lower Manhattan and Downtown Brooklyn, which is why construction is booming in Queens and areas like Bed-Sty. 2: Unlike years ago, the Wall Street area is a 24/7 community, which is something no one predicted even a decade ago. I have little doubt that 3 WTC will be able get tenants for those two reasons alone.
I didn’t realize there were office buildings in Bed Stuy…
The fact that two other buildings with a combined lease rate of around 58% haven’t signed up a private tenant in 2.5 years is an inconvenient truth easy to ignore, I guess.
Lower Manhattan is turning into a 24/7 community, and it has basically meant zilch for the office market.
Oh and here’s what really burns me, Silverstein is building his own privately financed massive tower about a block north on the other side of Church Street. Why can’t he privately finance this thing if it’s such a good deal?
If you’re referring to 30 Park Place, then that’s just based on the simple difference between the commercial real estate market and the condo market.
The commercial market is dying due to contractions in the finance industry, oversaturation of new office space built in the last few years (including the WTC tower) and general downturn in the market, especially in Lower Manhattan. Meanwhile the condo market is booming, and as I mentioned above, many old office buildings are actually being converted to residential in this area.
So getting office towers financed is a totally different animal than getting condos financed.
That’s my exact point. There’s no market for the existing towers let alone a third. Silverstein is eminently capable of building massive towers where the market supports it.
You realize the only two office markets with lower vacancies than lower Manhattan are midtown Manhattan and Washington DC???? That is a fallacy to say there is no demand.
You realize that commercial vacancies in DC are up and that prices are falling because there is a significant amount of contraction in the legal industry that was previously pay the rents on those class A buildings?
This is somewhat good for DC as it allows many of the nonprofits and design firms that had been chased to the suburbs to return, it’s also encouraged building more housing in central DC because the office market demand is falling and the outlook is grim.
More office space is not what we should be subsidizing.
Of course commercial vacancies are up. The Feds had an overheated market. To say that no office space is being built in DC is a fallacy. Plenty is going up at the Wharf and in the area near the nationals. DC has height restrictions so in some ways their market is artificial. That’s why places like Tyson’s Corner have many millions of square feet of commercial space in the pipeline. The fact is the NYC office market is strong – along with a few places like DC – Houston – and San Fran. 14percent vacancy for commercial is very healthy!!! Ppl must no understand the commercial market. San Fran is building a lot of office space as well. Like NYC – space in San Fran is expensive.
Some of that is also due to the fact that construction of the remaining sites (2 and 3 WTC) are still up in the air, and no one really wants to work next to a perpetual worksite.
But here’s the thing that keeps rubbing me the wrong way.
Silverstein isn’t asking for a loan here. He’s asking for a loan guarantee, which will help him secure the needed financing to finish.
The only way the PANY is on the hook is if Silverstein defaults, and I put the odds of that happening quite low. Silverstein rebuilt 7WTC before the PANY could even figure out what to do with the rest of the site (fighting over the master plan, tossing out the early plans, bringing in Libeskind, tossing his designs for the towers in favor of different Starchitects, while Silverstein ultimately went with SOM for 1WTC, who also happened to design 7WTC), and is now progressing up the street with the Park Place hotel/condo building.
Silverstein wants to get the site built out, so he can find tenants. The PANY has been fighting him pretty much ever since the dust settled after 9/11. This is yet another extension of the fact that the PANY signed a 99 year lease with Silverstein and yet they continually fight everything Silverstein has done with the site since.
Meanwhile, the PANY is now claiming fiscal responsibility in not extending loan guarantees? That’s laughable considering the billions they’ve expended on the new PATH station and shopping mall under the podium. Every attempt to keep the costs for that down have been rebuffed, and there was never any serious attempt to scale back the Calatrava design, even as those involved in green-lighting the design may have stood to benefit from any number of deals.
And when they’re not directly benefiting, they’re recusing themselves from every decision because they represent businesses doing work at the WTC or other PANY facilities (and for which we’d have to ignore that they haven’t signaled their intentions on approvals for various deals ahead of time).
You are correct. Most ppl don’t understand the complexity of the deal. Many just hate rich ppl period – so Silverstein is evil to them. They hate rich ppl more than they hate government agencies even.
Downtown Manhattan, Downtown Brooklyn, and Jersey City all have a good bit of construction going on or in the pipeline, but it is almost all residential or hotel, because there is little demand for office space.
Bingo. In fact many Jersey City projects were converted in the planning stage from office to residential projects to get them off the ground. If you look at Newark, NJ pulled out all the stops to get Prudential and Panasonic to build in the downtown core. And they did, with what are fairly small buildings. For whatever reason, we are just not seeing private demand around here for large office buildings. PA should not be the greater fool in this market. If they want to build something on spec, they can do warehousing near the ports.
There is private demand for office space, but developers build for the most profit which right now is residential. It’s also actually more in the city’s interest for there to be offices at the transit hubs instead of residential.
Why is office space better for the city’s interest than residential? I’m lost, please help me understand your argument.
Lower Manhattan needs newer commercial space. Many of the companies down there moved to midtown or Jersey City for newer space. Most of the old office buildings are being converted to residential. It’s been going on for over a decade… Before 9/11 even.
Why does it need office space, if there’s so little demand for office space that people are paying to convert office to residential?
The conversions are happening for two reasons. The first is because most financial firms moved to midtown for more modern space or cheaper and more modern space in Jersey. That left a lot of empty old space. That’s when the conversions began. Then after 9/11 with so much office space gone – more firms left – which sped up the residential conversions. It became a domino effect. The reason Hudson Yards is being built is because firms need more modern office space. The same reason downtown needs the WTC (which will still be smaller than the original).
There is plenty of leasing going on downtown. Firms that are priced out of midtown are going down there. That and firms whose workforce is along PATH and in Brooklyn.
The idea that there is no demand is a fallacy:
http://therealdeal.com/blog/20.....3-cushman/
When the Newport area of Jersey City was first going up in the late 1980’s, it was mostly office towers. Today the focus is almost exclusively residential & hotel construction along with retail & restaurants.
Even the “leased” space is not really leased as we would normally think of it. A good deal of the leasing is Port Authority’s own office space! I believe they have a ton of space in tower 4. Part of Tower 1 is the Government Services Administration and other government offices. Building Tower 3 would be great for the site and the city, and a monumentally stupid decision for PA financed.
The odd thing is that this decision emerges amidst all the sudden interest in the PA using toll revenue for non-transport projects. Such has been going on for eons, but now the media discovers it as a cudgel against a certain republican governor. And yet Sheldon Silver comes onto the scene to agitate for what will essentially be setting another billion dollars of toll revenue aflame. I hope they vote this down today.
The PANY was taking most of 4WTC as their headquarters, after relocating elsewhere after the 9/11 attacks. They’re returning to the WTC, so that explains why the building got done.
1WTC has a number of tenants announced, including Vantone and Conde Naste. Vantone is taking about 400k sf. Conde Naste is taking 1.2 million sf at 1WTC, so it’s pretty significant chunk although about 1.4 million sf remain to be leased in the building.
3WTC currently has Group M as an expected tenant, but Silverstein needs an additional major tenant to move past the podium stage to secure the rest of the financing. Group M is supposed to take 500k sf of the 2.5million sf 3WTC.
The skyscraper nerd in me dreams of a completed WTC complex. The transit nerd in me laments over the condition of our tunnels and bridges. I am a man torn asunder.
Also – can we all please agree to stop saying Ground Zero?
Also – can we all please agree to stop saying Ground Zero? Agreed. It’s become nothing more than a sociopolitical term like the “Patriot Act.”
As for Silverstein, If the PA new a decade ago what a mess 1 WTC would be, it wouldn’t get off the ground despite the fradgal state of the american psychy.
A lot of people throughout the country want to see all the new buildings completed purely for the symbolism of completely rebuilding what the terrorists destroyed, practicality be damned. It’s the classic American spirit, to build impressive things simply because we can, the way places like China and the UAE are now doing.
Romanticism aside, though, the reality does remain that the market for office space is stagnant and likely to remain so for a while… technology has reduced the number of people necessary to perform some office-related tasks (compare the number of secretaries out there now to 30 years ago), and even more importantly, it has in many cases reduced the necessity of being in an office at all. A lot of people now commonly work from home, or from wherever, off their laptops and blackberries.
So the future for construction is in residential towers, not commercial towers.
Is there a back-story anyone is aware of as to why Sheldon Silver made a statement on this? Hard to imagine he’d stick his neck out just to have the proposal lose and make himself appear to have suffered a loss.
His district supports WTC construction and wants the complex to be completed, so I imagine he’s just garnering political points with his constituents. Ultimately its up to the PA board members.
There is no question that the Port Authority has become a piggy bank for a wide array of projects outside its transportation mission. That said, it does own the WTC site and I think there is good reason to think the eventual completion of WTC 3 is a good deal for it and the region. Having walked around the memorial and seen some of the new PATH station that’s opened up, it really will be a phenomenal office park (let’s be honest about what it is) when complete, unlike anything else in the country. If they give the financing now, WTC is still at least a couple years away from opening. At that point, the final PATH station, the completed memorial, WTC 1 and WTC 4 will be totally operational. It’s likely that much more office space will be rented. In the event that Silverstein defaults, owning WTC 3 is also not exactly detrimental to the Port Authority’s bottom line. And to some degree, subsidizing office space if it generates fares on the PATH isn’t a dumb thing to do.
>That said, it does own the WTC site and I think there is good reason to think the eventual completion of WTC 3 is a good deal for it and the region.
Eventual completion, sure. So why not wait until the commercial real estate market picks up and Silverstein is able to secure the financing from investors. Building 3 WTC means transportation projects get cut, or at least put off. I’d rather see a renovated PABT now and 3 WTC later than the reverse.
Actually it will cost MORE if you wait until the market says so. When the market heats up that means you pay more to build. You are also incorrect – since Silverstein is the building the building – NOT the PA. The PA would simply be guaranteeing the loan. That is not giving cash.
As an aside – lower Manhattan only has a 14.3% vacancy rent. Most cities in the US would give anything to get that low.
A loan guarantee is a liability. Why would that have no effect on the PA’s finances?
Why should it matter to the PA if Silverstein has to pay more to build his tower?
The building would be collateral. Do you not know how much the building would be worth? Silverstein already got Group M to sign a major lease. The fact is that if this was any other place but the WTC there wouldn’t be a problem. In effect the site would be worth less if this building doesn’t get built. In essence they would be cutting off their nose to spite their face
Then why does Silverstein need a loan guarantee from the PA in order to get investors to loan him the cash to build 3 WTC? It’s a liability and has the potential to cause cash flow issues for the PA. The reduces their flexibility elsewhere. How can you not understand that?
If this was anywhere but the WTC there would be more opposition to the PA giving a loan guarantee. What’s your point there?
Group M leases how much of the building? Less than investors want leased before they loan money to build commercial real estate elsewhere in NYC.
You don’t seem to get that the WTC site is not the same as a private development. As others said “how come he can get private money at his other developments. Simply bc he owns the land where e builds them and there was no terrorist attack on them (bar #7 WTC). It’s perplexing why ppl don’t seem to get that this site is not “normal” for several reasons.
Time warner moving the same amount of ppl to Hudson Yards was enough to get that one building off the ground. The WTC is a different beast.
http://www.nytimes.com/2014/01......html?_r=0
Under the deal with Time Warner, the media company would be the anchor for a second, even larger tower. After the final contracts are signed, it will own almost 40 percent of the 2.6 million-square-foot tower.
GroupM signed for a quarter of 3 WTC, not 40%. There’s a lot of new office space going up right now downtown from 1 and 4 WTC. Private investors aren’t backing 3 WTC now for that reason. If Silverstein could lease out enough of 3 to get financing it would get built now. He hasn’t. So he’s asking for a handout, on top of the loan guarantees and cash already available from the PA, NYC, NYS and the feds for the WTC site.
Why are you pushing for him to get his handout? To show the terrorists that we can rebuild or something?
Demand has nothing to do with it… Private entities don’t want to get involved simply because the WTC is owned by the PA. It’s not that complicated. Hudson Yards is scheduled to be an even bigger project than the WTC – but it faces less uncertainty because it’s owned by a private entity. The WTC has to deal with not just the PA but also with all the politics of rebuilding.
9/11 happened 13 years ago… that’s a sophomoric and infantile statement to make.
Are you just that hateful of anyone who knows how to make money? Are you saying someone who has a 99 year lease but was destroyed shouldn’t have gotten money from the government who is supposed to thwart such attacks???
I’m actually not pushing for anything – I’m talking about what’s right and wrong.
The bottom line is the agreement was that the PA would guarantee loans if a tenant took 400k sq ft. Group M as you noted is taking 550k. A deal is a deal. Again – the complex is more valuable with that tower built. It’s political folly.
If as you say a deal is a deal, then you should know that no, the new guarantee Silverstein needs to build 3 WTC now isn’t from the 2010 agreement with the Port Authority. It’s on top of what was available from that deal, which was structured to allow market forces to decide when the building goes up and to limit Port Authority financing for it since there are other parts of the Port Authority’s empire that need financing.
1 WTC 3.5 million square feet
2 WTC 2.5 million square feet
3 WTC 2.2 million square feet
4 WTC 2.5 million square feet
5 WTC 1.3 million square feet
7 WTC 1.6 million square feet
The planned complex has more space than the original one. 5 is in limbo. 2 isn’t scheduled to open until 2020. Why this need to get 3 up now?
#2 is on hold… and rightfully so. #2 has nothing to do with #3.
Where #5 is – is not part of the original site. I think the PA should sell that off instead of trying to develop it. Again – it just goes to the point that the PA doesn’t understand real estate. RE COULD be an asset for it – as it is for other agencies overseas (Hong Kong – Japan – etc) – but the PA is just not good at it. That’s the whole point of giving Silverstein a 99 year lease to run it in the first place.
Lenders want guarantees – this nothing added on. The PA agreed to guarantee once a tenant for 400k was found. That was done.
Why now? There is a strong – healthy company that wants to take 550k feet. Only a government agency would be so ridiculous as to bicker over that.
Commercial real estate is about momentum. Again – looking at Hudson Yards. First they signed Coach – then in quick succession L’Oreal and SAP. It is without question Time Warner looked at it and said “ok – we want to be a part of that”. You can be assured there are plenty of other companies looking to “be a part of it now”. Look at what happened when Google paid $2 billion dollars for a building in Chelsea… Now all the west coast tech companies are adding space in places like Soho and elsewhere. I mean a developer just finished a speculative office building in the East Village at 51 Astor Place and filled it up pronto when ppl thought he was crazy. The East Village is not even an “office district”. Why did it fill up so fast? Well when IBM announced they were taking over 100 sq. ft. they noted “momentum” of tech entrepreneurs starting new businesses and it’s location near the activity of NYU.
Not to veer too far off – but if the PA didn’t own the site – Silverstein could easily leverage his other holdings to get financing. The WTC again – is not a “normal” real estate development. Getting that building done in a decent amount of time signals to the market that this is a serious development. Which means it will begin to produce revenue faster. Many firms priced out of midtown continue to head downtown which would have never looked before.
As more older commercial properties downtown are converted to residential – it could cause remaining commercial spaces to go up in price. The buildings are older as it is – so an increase in price means more jobs going to New Jersey (or elsewhere). There is no sense in paying more in lower Manhattan for older space when you can just hop across the river. That’s the reason all those towers were going up in Jersey. The great recession is the only thing that slowed it down. We see just last week Bank of NY Mellon plainly said they are considering going to Jersey. Imagine the symbolism of that! Even Forbes just announced they are moving to Jersey. While there is always some natural movement – the last thing lower Manhattan needs is to constrict supply and drive prices higher – ESPECIALLY since New Jersey offers every imaginable “assistance” to get NYC companies to jump across the Hudson. That means more lost jobs for NY.
The faster the tower is built is the faster the PA can receive money from Silverstein and for the retail portion of it the tower. Again – this is not cash – but a guarantee. If Silverstein defaults then the PA has a much bigger problem because that would basically only happen if the entire site failed. Again – only with a government agency would this deal be a problem. Ppl on the PA board who are against it know nothing about real estate or actually making money.
No the PA loan guarantees would increase from $200 million in the 2010 agreement to $1.1 billion under this current plan. All to set up two million square feet of vacant office space to compete with the other properties they have on the site. The reason 2 and 5 are relevant is that construction at this site isn’t ending anytime soon. So why rush 3? Once the other buildings start to fill up and private lenders are willing to back 3 WTC under the generous terms granted to Silverstein back in 2010, it will get built. So again, why rush it? Other than using the Port Authority to finance a gamble that Silverstein could profit handsomely from of course.
And why do you think Silverstein can’t mortgage his other properties to raise funds for 3 WTC?
They agreed to make guarantees. That’s called a deal. I know government entity don’t understand that – but it muddles things up.
It’s not about rushing. Time is money. Commercial and residential development are not the same thing.
When you have a top notch tenant you don’t say to them… “oh give me a few years to work this stuff out with the government”. There is a reason government has such a terrible track record with getting anything done.
Again – 5 has nothing to do with the site. And number 2 is not even being considered right now.. Why are you even bringing it up?? It has absolutely nothing to do with the matter at hand.
He can’t because he doesn’t own the site!!! How many times does that need to be said???? Will a back give you a home improvement loan for a place you rent??? No – because you are not the owner!
If the PA gave up the site outright this would have been finished. Number 7 went up quickly and is full. The PA and the rebuilding politics because of the sensitive nature about it being a “graveyard” are the problem.
What tenant is going to consider moving to a property held up in government rigmarole?? Very few – and that’s what the problem is.
And why would issuing a loan guarantee have no impact on PA finances?
The PA is a government entity. Who are they borrowing money from that their liabilities will hinder them???? Again – if the site fails then that means the NYC market is incredibly weak. Then this site might as well fold up too – because the job market in NYC would be so horrible that transit would look like the lost decade of the 70’s. There would be no revenue.
http://www.thesquarefoot.com/b.....statistics
The fact is there is about 100 million square feet of office space in lower Manhattan. The vacancy rate overall is still low. Anywhere outside DC or midtown would love to have that vacancy rate (on the site referenced above you can see the side tabs and compare how the vacancies are lower than in “booming” Houston and Dallas – both of which are still building millions of square feet of space). One World Trade has Conde Naste taking 1 million square feet and a Chinese entity taking a chunk. There is no glut. 2 million square feet of new space increases the total by 2% downtown. In NYC – that is nothing! Well at least for a big commercial developer it’s not. For the ppl on the PA board that know nothing about real estate – it is a big deal. Neighboring Brookfield Place (formerly World Financial Center) has about the same amount of empty space. They are not the least bit worried – because they understand the market.
http://www.bloomberg.com/news/.....shift.html
http://online.wsj.com/news/art.....0609987666
http://www.bizjournals.com/new.....l?page=all
Actually I was wrong… While 14% is still below the national average – currently lower Manhattan is only at 12.2… it would go up to 14 if this building were to go up and no new tenants moving into the area. Also – prices are still high.. so there is no glut.
Bank of NY Mellon is selling their headquarters now.. and will either relocate in the area or move to Jersey City.. Why JC? Price per square foot is lower. So there can’t be a “glut”. This is all politics – plain and simple. It actually shows that while real estate COULD be an asset for the PA – they still have ppl running it that don’t know much about it. They did the smart thing by leasing it… but they still muddle it up.
“Why should it matter to the PA if Silverstein has to pay more to build his tower?”
Ultimately the PA owns the site. Unlike with public dollars… private entities have to actually make money – so it’s best to build when costs are lower to reap more of a profit. If the PA had that sense we wouldn’t have the costly boondoggles that we get.
haha what?
Oh, sheesh, put the tenements back. It’s more life-affirming than stale modernism.
Do the R-32s at least still have their old Hudson Terminal roll signs? I guess they could simply program those into the R-160s on the E.
At the end of the day the PA owns the WTC site. Having a stub of a building sitting there makes it more difficult to attract tenants to the buildings that already exist there. Guaranteeing a loan has no bad affect on the PA because the PA would get the building if Silverstein defaults. The so called editorial in the NY Times is very poor. It attempts to take a very very complex real estate situation and make it seem like it’s some simple “give away”. He doesn’t really understand the complexity of the deal.