Construction of several ground zero office towers could be put off for decades because of the failing real estate market, the site’s owners said Thursday, citing an analysis that projected one skyscraper might not be built and occupied until 35 years after Sept. 11.
Developer Larry Silverstein and the Port Authority of New York and New Jersey have been talking on and off for months about rewriting a 3-year-old agreement that gives the developer rights to build three out of five towers planned at the Sept. 11, 2001, terror attack site.Silverstein, unable to obtain financing for all the towers and with only about $1 billion left in insurance money to pay for them, asked the Port Authority last fall to guarantee financing for two of his towers, officials familiar with the negotiations say.
The Port Authority agreed to back one tower already under construction, where the government agency has agreed to move once it’s built. Executive Director Chris Ward on Thursday cited the exodus of major financial firms like Merrill Lynch and AIG from downtown Manhattan as a reason to not flood the market with 10 million square feet of office space at the same time – about 2013.
Ward also said that Silverstein was free to build his three towers on his own.
“Mr. Silverstein is asking the public sector to finance, in fact, his buildings,” Ward said. Silverstein “is seeking the Port Authority’s capacity to finance office space downtown.”
Janno Lieber, who oversees the trade center site for Silverstein, said today that guaranteeing financing for Silverstein’s towers would help generate commercial rents the Port Authority could collect for the 90 years remaining on Silverstein’s lease.
“Most important, from a public standpoint, this allows the Port Authority to honor its commitment to rebuild lower Manhattan – a promise that the agency has made many times since 9/11,” he added.
The Port Authority is building a 1,776-foot skyscraper, commonly known as the Freedom Tower, that is set to open in 2013. It has no beginning or completion date for a second tower it is responsible for building. Silverstein’s other towers should be built whenever the market improves, Ward said.
The Freedom Tower and Silverstein’s three planned towers – designed by architects like Lord Norman Foster and Richard Rogers – are all expected to be among the city’s tallest towers.
But an analysis prepared for the Port Authority by the Cushman & Wakefield real estate brokerage projected that while two of Silverstein’s towers could be biult by 2013, a third wouldn’t be built until 2030 and fully leased until 2036. A second tower that hasn’t been built yet wouldn’t be fully leased until 2025, the analysis said.
Mayor Michael Bloomberg, who has committed city office space to the one tower the Port Authority agreed to back, said Thursday the 2036 date is “just a number out of the blue.”
“My hope is that things will get done a lot quicker. … The problem is that you sort of have to do everything or at least part of everything because if you don’t, then nothing works.
Bloomberg mentioned the Sept. 11 memorial, which the Port Authority has promised to open in part by the 10th anniversary of the attacks. But the mayor, who chairs the memorial foundation, said “the museum will not be done and there will be parts that will, for years afterwards, be going in and out of accessibility.”
The Port Authority and Silverstein have said they need a new lease deal to ensure completion dates for the memorial, an underground parking lot and a multibillion-dollar transit hub. The lease is also costing Silverstein hundreds of millions of dollars in rent for undeveloped space, while the Port Authority has paid over $100 million in late fees for not excavating all the land Silverstein needs to build on.
The lease requires Silverstein to build his three towers by 2013 or forfeit rights to them.
Kathryn Wylde, chief executive of the Partnership for New York business group, said the real estate market would likely drive the decision how fast to build back office space.
“If you don’t have commercial tenants demanding the space, I don’t see it being developed,” she said. But she wondered at projections like the 2030 date, saying demand for new office space in lower Manhattan would happen long before that.
“It may take five years, it may take 10 years,” she said, “but it’s not going to take 21 years.”
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