Bloomberg: Lower Manhattan Revival Nears Culmination After 13 Years
September 9, 2014 – Anthony Gardner had sworn off high floors of skyscrapers until his guides on a tour of New York’s 1 World Trade Center offered to take people to the 83rd story. That’s the same floor his brother, Harvey Gardner III, was on 13 years ago when the first plane hit the site’s North Tower.
“That was a sign that I needed to go up there, and I was so glad and grateful that I did,” said Gardner, 38, who left a public relations career after his brother’s death in the Sept. 11, 2001, attacks to work on behalf of victims’ families.
The World Trade Center site’s integration of memory with commerce creates “a very powerful experience for visitors while also contributing to the economic revitalization of lower Manhattan,” said Gardner, now the executive director of the New Jersey State Museum in Trenton. “You’re really seeing that take form now today.”
Building at the 16-acre (6.5-hectare) trade center site is set to be substantially completed in the next year, following delays, litigation, disputes and power plays among a cast of stakeholders that included political officials, residents, architects and advocates such as Gardner, survivors of the almost 3,000 people lost in the cataclysm. As construction nears a culmination, lower Manhattan is standing out for its revival.
Office leasing is accelerating, with media and technology companies joining the financial firms that traditionally inhabited the area, and the population has surged. With the 9/11 memorial and museum now fully open, and two office towers, a transit hub and retail center to be done by late next year, people are finally going to get to live and work in the vision of a new downtown forged more than a decade ago.
The area is on the verge of becoming “the first modern commercial district to emerge in New York City in over a generation,” said Tom Wright, executive director of the Regional Plan Association, which advocates progressive urban planning.s. “It’s going to be really remarkable.”
Lower Manhattan office asking rents have climbed almost 30 percent from a 2010 low. Vacancy rates are down after companies such as Time Inc. and Bank of New York Mellon Corp. reached deals to move to the Brookfield Place complex.
The residential population more than doubled in the decade through the end of 2013, according to the Alliance for Downtown New York. An additional 2,200 apartments are slated to be completed by 2017, as developers including Larry Silverstein, Stephen Witkoff and Michael Shvo plan luxury high-rise condominiums.
The downtown alliance, an advocacy group for Lower Manhattan, estimates that $30 billion has been invested in the area in the last decade, at both the trade center site and in projects elsewhere.
At the trade center site, two skyscrapers are substantially done, though more than a third of their combined office space is unrented. The $3.95 billion, 1,776-foot (541-meter) 1 World Trade Center, the western hemisphere’s tallest building, is scheduled to open before the end of this year.
Its lead tenant, magazine publisher Conde Nast Publications Inc., which will occupy 1.2 million of its 3 million square feet (279,000 square meters), is moving equipment into the tower, said Eric Engelhardt, the building’s leasing director for the Durst Organization, the partner in the skyscraper with the Port Authority of New York and New Jersey, the trade center site’s owner.
Four World Trade Center, a 2.3 million-square-foot tower, opened late last year. The Port Authority will make the building its headquarters by the end of the year, and the city’s Human Resources Administration plans to move to the property early 2015. Silverstein, who leased the twin towers for 99 years just six weeks before their destruction, holds development rights to that and two other skyscrapers planned for the site.
“We are clearly at the precipice of people viewing this as done or almost done,” said Scott Rechler, who as vice chairman of the Port Authority has been managing the agency’s oversight of the redevelopment of the World Trade Center area.
Being almost done took a long road. Major causes for delays included a redesign of 1 World Trade Center ordered in 2005 after the New York Police Department said the building, then known as the Freedom Tower, couldn’t be protected from a truck bomb. Silverstein and a syndicate of insurers battled in court for about six years before reaching a settlement in 2007. The credit crisis of 2008 and 2009 hampered financing of office construction. The memorial museum was held up as rebuilding officials and the foundation overseeing it argued over costs.
“Of course, we all wish we could have gotten it done a lot faster,” Silverstein said yesterday at a briefing for reporters at 4 World Trade Center. “But that does not diminish the pride we all should feel.”
The 9/11 Memorial Museum was dedicated in May by families, survivors and rescue workers, along with President Barack Obama. During a visit last week, people could be seen taking photos of themselves around the two square pools that approximate the locations of the destroyed towers.
Still to come are a vehicle-security center and an underground passageway that will serve the delivery needs of the office towers. A center one block east of the site that will serve 11 city subway lines is opening this year, according to state assembly speaker Sheldon Silver, while a Santiago Calatrava-designed transportation hub will connect users of the authority’s PATH trains to New Jersey with the downtown transportation network.
At $3.75 billion, it’s the costliest subway station in history, and its price tag has been questioned by newspaper editorials and public officials, including Rechler.
“I don’t think I would have thought that necessary,” had he been among the decisionmakers when the project was conceived in 2004, Rechler said in an interview. Officials put the cost at $2 billion at a presentation of Calatrava’s design that year.
Rechler said the authority would recoup about $1.6 billion of the costs from Westfield Corp., which agreed to pay that amount for control of the 350,000 square feet of stores that will be connected with the transit hub.
The Sydney-based mall company either has secured or is close to securing an Apple Inc. store, clothier Turnbull & Asser and upscale fashion merchant Michael Kors Holdings Ltd. as tenants, among many others, the Wall Street Journal reported in June. Molly Morse, a Westfield spokeswoman, declined to comment on the tenants.
The only project currently under way that should still be in construction after 2015 is 3 World Trade Center, subject of a $1.5 billion Liberty Bond sale. That offering should happen next month or in November, Janno Lieber, president of Silverstein’s trade center unit, said in a telephone interview.
Three World Trade has only one signed tenant, the advertising firm GroupM, leaving about 80 percent of its 2.5 million square feet unrented.
“Three World Trade Center will lease up in the normal course,” Lieber said. “We don’t have to make any additional leases before the financing goes forward. There are real users and real tenants who are in discussions.”
Since May, Durst signed Servcorp, an executive office space provider, and ad agency KiDS Creative LLC to full-floor leases at 1 World Trade. It also reached a deal last week with Cushman & Wakefield Inc., the leasing broker for the tower, for about 10,200 square feet.
The leases brought the tower to almost 58 percent occupancy. At 4 World Trade, Silverstein in July signed MediaMath Inc. to a 106,000 square-foot lease, the building’s first non-government tenant. Combined, about 2 million of the 5.3 million square feet at the two skyscrapers is still available.
“In the current market climate it is a challenge to rent a new building to multiple tenants,” said Joseph Harbert, president of the eastern region for brokerage Colliers International. “The basic rule of real estate is that eventually almost all space rents at some price. So in the long run, 2 million feet of new construction will be absorbed.”
Beyond the towers under construction, 2 World Trade Center, which is built up to street level, is awaiting an anchor tenant before Silverstein can proceed. There’s also a site for a fifth skyscraper just south of the 16 acres, where Deutsche Bank AG had a tower that was damaged beyond repair in the attack.
Gardner, who wrote a message to his brother on one of the beams of 1 World Trade Center during his visit, said he’s finally getting comfortable with the site’s twin purposes of remembrance and commerce.
After waging a public campaign for the preservation of the twin tower’s box-column footings 70 feet below the street, he got his wish. The footings, which mark off the massive squares which once jutted more than 1,300 feet into the sky, were left visible, as was a section of the “slurry wall,” a 65-foot section of the retaining wall that withstood the disaster.
Gardner said 1 World Trade Center is visible from his town of Verona, New Jersey, a suburb that’s about a 20-mile (32-kilometer) drive from lower Manhattan.
“It’s a comfort for me to see it there,” he said.