‘Why rent there when you can rent on Park Avenue?” That’s what Donald Trump is saying to friends about the new 1 World Trade Center, according to The Post’s Lois Weiss. But the fact is, if you’re looking for truly modern office space, you probably can’t find it on Park — or almost anywhere else in town.
That’s why 1 WTC is vital to the city’s future — and why we should pray Larry Silverstein can soon proceed with at least one of his planned towers at the site.
As Weiss reported, Trump discussed with Port Authority Executive Director Chris Ward the possibility of putting in a bid to partner with the PA in building, managing and leasing the 1,776-foot-tall 1 WTC. But his snarking at a project that didn’t interest him enough to put in an actual bid can only provide comfort to those who oppose commercial construction anywhere in the city.
Worse, he’s feeding the absurd theory that we already have enough office space and that all office space is interchangeable. In fact, it’s anything but.
Tenants will come to 1 WTC for the same reason they came to Silverstein’s 7 WTC, which many expected to fail: Only brand-new buildings offer electronically advanced, environmentally attuned space.
THE fact is, New York is in creasingly a city of obsoles cent office buildings — an astounding 65 percent of our stock is at least 50 years old, compared with 24 percent that old elsewhere in the US.
Consistent demand for newly minted Manhattan office space explains why buildings erected “on speculation” — that is, without tenants signed in advance — almost invariably do get fully leased up within a year or two of completion. This, despite all the stubborn, ignorant claims that “spec” buildings” stand empty for years and glut the market.
Although not a spec project, 1 WTC might as well be. A mere 190,000 square feet of its total 2.6 million are leased so far (to China’s Beijing Vantone). Federal and state agencies are supposed to take 1 million square feet more, but even that will leave some 1.3 million feet up for grabs. Moreover, below-market rents conceded to the government units will put pressure to achieve higher prices on the rest of the tower.
The challenges apparently were too much for Trump — but six other major developers put in formal bids to partner with the PA (Related Cos., Boston Properties, the Durst Organization, Brookfield Properties, Vornado and Hines).
It’s to Ward’s great credit that he won their confidence — the PA’s past bumbling had sent prospective partners away muttering. A partnership with any of the six would effectively privatize the project in the public’s eye, and banish at a stroke any lingering stigma over the building’s tortured political history.
AND not a day too soon. Be cause, when it opens in 2013, 1 WTC will likely be the only game in town for companies requiring the newest, most modern and efficient home.
Nothing else is being built — and might not be for years to come.
The credit crisis put the brakes on every office skyscraper that was planned uptown — including by three of the 1 WTC bidders. At Ground Zero, Silverstein’s three planned towers face indefinite delays. But 1 WTC’s construction is fully paid for with insurance proceeds, Liberty Bonds and the PA’s own capital. Although years behind schedule, its completion is certain.
It’s also urgent. Because, while some firms can still settle for, say, moving from a 1970s building on Sixth Avenue to one on Third Avenue, others require newly minted digs offering the latest electronic and mechanical amenities.
Office tower technology advanced more in the last decade than it did in perhaps the preceding 50 years. Only the newest buildings have the 14-foot “slab to slab” floor heights needed to install modern fiber optics — plus floor-to-ceiling windows and “green” features that save tenants enough money to help mitigate the higher rents such locations charge. “Modern” projects erected as recently as the late 1980s don’t compare.
All of which leaves New York, still by far the nation’s largest office market, under threat — not only by London and Shanghai, but by nearer rivals like Stamford, Conn., where Royal Bank of Scotland recently established its headquarters.
Well before the credit crunch made almost any new con struction impossible, New York was falling behind other financial capitals in creating 21st century office space.
For a host of reasons, developers here prefer to build with tenants pre-signed, but it isn’t always possible — in part because companies are leery of relying on promised completion dates until a project is nearly finished.
Yet although spec projects are risky, their recent history here is illustrious. Certain “experts” can’t forget that, 20 years ago, banks foreclosed on several such Midtown towers. Those long-ago setbacks supposely show the dangers of replenishing the lost World Trade Center office stock.
But the real lesson wasn’t that developers brought too much unclaimed space to market at once, but that all the buildings soon enough found their footing. And, had 1540 Broadway not been available to Bertelsmann, or 1585 Broadway to Morgan Stanley, the city might well have lost both firms to other cities or the ‘burbs.
That was equally true at 7 WTC, 4 Times Square, 222 E. 41st St. and 505 Fifth Ave. — large, new spec office buildings by different developers over the last dozen years that provided homes for Conde Nast, Moody’s, CIT and other firms the city couldn’t afford to lose. All were risky for their owners — but filled up within a year or two of completion.
This year, the much-discussed 11 Times Square at Eighth Avenue and 42nd Street will likely keep the streak going. Although the Times and other publications continue to whine that it has yet to sign tenants, two huge deals are pending (with Proskauer Rose and an aquarium).
Developer SJP Properties started the project shortly before the 2008 crash, so it’s no surprise it’s taken a while to lure tenants. But the tower isn’t even finished, and temporary delays in leasing up new buildings are common, often inevitable — and not to be confused with failure.
That’s the real story of New York’s commercial market — guaranteed demand for every new tower that boasts features advanced for its time. It bodes very well for 1 WTC. No wonder the biggest players in town all want a piece of it.