The term sheet GroupM signed yesterday with Larry Silverstein at 3 World Trade Center vindicates the developer’s faith in a site many had once given up for dead — and also, the enduring appeal of brand-new state-of-the-art office construction to modern media companies.
The 16-acre, former “Ground Zero” will soon be home to three great new commercial towers, with only the possibly prettiest of them, the Norman Foster-designed 2 WTC, yet to rise.
The preliminary agreement for GroupM to take 515,000 square feet in the planned, 80-story 3 WTC was first reported by nypost.com yesterday afternoon. Sources expected the developer and the tenant to sign a lease later this year.
It wasn’t known what GroupM will be paying. But once completed, the lease will release $1.3 billion in Liberty Bond financing, backstopped by the Port Authority, allowing Silverstein to complete the $2 billion project in 2016.
The Richard Rogers-designed 3 WTC is now a mere 7-story podium, which will contain 183,000 square feet of retail. Silverstein wasn’t able to raise the remaining 73 floors until an anchor tenant came along.
A term sheet spells out all the major financial and other terms of a proposed lease. Term sheets don’t guarantee a done deal, but they lead to one more than 90 percent of the time.
Of course, any deal can break down. It’s worth recalling that, although GroupM was first reported to be hot for 3 WTC last year, so was law firm White & Case — which sources said is no longer in talks and has turned its attention to Midtown.
But a term sheet is much more than talk. GroupM’s near-certain commitment demonstrates again how nonfinancial firms have come to developers’ — and the city’s — rescue as Wall Street continues to sit on the commercial leasing sidelines.
The PA’s 1 World Trade Center is anchored by Condé Nast. Related Cos.’ first Hudson Yards tower will be home to Coach Inc., and Time Warner has a term sheet with Related for a second tower there.
GroupM is a division of global media powerhouse WPP Group, chaired by Martin Sorrell. GroupM calls itself the world’s largest media investment firm, boasting $90 billion in billings last year and 400 offices in 81 countries.
It’s the parent of media agencies Maxus, MEC, Media.com, Mindshare and Kinetic.
Currently based at 498 Seventh Ave. and a few other uptown locations, it plans to consolidate in 9 lower floors at 3 WTC by late 2016 — five of which have sprawling 70,000 square-foot floor plans, which, it was originally thought, would appeal mostly to financial firms.
But the vast floors also lend themselves to the open and “bench” seating arrangements increasingly favored by creative companies — nothing like the paneled-office environment of “Mad Men.”
Another huge advantage for companies like GroupM is proximity to where young creative staff tend to live — mainly downtown, in Brooklyn and in nearby New Jersey, as a survey by the Downtown Alliance found last year.
Related’s success in luring Coach, L’Oréal, SAP and probably Time Warner to Hudson Yards has made it seem that leasing momentum had shifted there at downtown’s expense.
Yet, for all the ongoing construction, the new WTC is much further along than anything in the far West 30s. Condé Nast is scheduled to move in by late 2015.
The WTC site is surrounded by hotels, stores and apartment buildings, and the area is served by unparalleled mass transit, including 10 subway lines and the PATH station.
Assembly Speaker Sheldon Silver last night acknowledged Silverstein “for his continued investment in Lower Manhattan and his unwavering dedication to our community.”
But it’s easy to forget that a few years ago, Silverstein was widely derided for his effort to establish a new commercial center at the terror-ravaged WTC.
The success of his 7 WTC — which he built on spec just north of the actual 16-acre site, and soon filled all its 1.7 million square feet — helped to alter perceptions.
All the players involved in the Silverstein-GroupM negotiations either declined to comment or didn’t return calls. Prominent in the talks were CBRE’s Gregory Tosko and Mary Ann Tighe for GroupM and Silverstein’s Jeremy Moss.
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Pardon our skepticism about the likelihood of Tavern on the Green reopening this year, which the Parks Department describes as its “goal.”
We hope we’re wrong. But a visit to the site found the landmarked 19th-century building under a web of scaffolding that doesn’t look close to coming down. None of the promised landscaping is in place, and large holes remain in the structure’s brick walls.
Three months ago, The Post reported that licensee Emerald Green Group was having funding problems. A Parks Department spokesman said yesterday, “Our goal remains to open Tavern with Emerald Green as the concessionaire this year.”
The rep also said Emerald Green, run by Philadelphia restaurateurs Jim Caiola and David Salama, “was scheduled to begin its interior work in July, and we believe they will still be able to begin that work this month.”
But even if they have all the dough they need, it’s hard to imagine a new restaurant sprouting soon amidst the rubble.
So far, all the visible work is being done by city agencies, including on the site’s roof and HVAC systems.
Recent filings with the Department of Buildings are in the name of the city, not Emerald Green.
And although the Parks Department says Emerald Green has a “signed agreement in place” with the New York Hotel & Motel Trades Council Local 6, sources said that document, signed last year, was far from an actual contract with the union.
Asked to clarify the point, the Parks rep said, “There is another, more recent agreement that outlines how the union will organize Tavern’s employees.”
That doesn’t sound like an actual contract, either. If all the pieces of a new Tavern aren’t in place by next year, it will be a mess for the next mayor.