5/13/2013
By Ivan Pereira and Dan Rivoli
Developers of 1 World Trade Center and urban planning experts predict the iconic new tower will lure plenty of tenants before it opens despite being 45% vacant 18 months before its expected completion.
Condé Nast, the biggest tenant; the federal government; China Center New York and the Legends Hospitality Group, which manages the observation deck, are the only companies that have signed leases for 1 WTC.
Developers said they expected this pace for leasing the real estate.
“The building’s size and height means there’s really no comparison in New York City,” said Jordan Barowitz, a spokesman for Durst Organization which is codeveloping the tower with the Port Authority.
Barowitz said that the skyscraper will be ready on time and expects more leases to be signed by opening day. He added that the building can accommodate a variety of companies in the media, finance and tech industries.
“We’ve had interest from all of those sectors,” he said.
Matthew Lasner, assistant professor of urban affairs and planning at Hunter College, said those types of companies are more willing to work downtown, than in the past when the area was home to law firms and banking houses.
“That will ultimately work in the World Trade Center complex’s favor,” Lasner said.
Unlike the most recently built skyscrapers, like the Bank of America Tower or The New York Times Building, the World Trade Center didn’t have a major corporation anchor it before construction began.
But not having tenants before work began won’t mean the tallest building in the western hemisphere will be mostly vacant on opening day, experts said.
Steven Spinola, president of the Real Estate Board of New York, said the building’s iconography counters the average $70 per square foot rental price tag.
“Downtown has gone through numerous obituaries and they never prove correct,” he said.
Seth Hirschhorn, the senior managing director at real estate group Citi Habitats, said that prospective tenants are eagerly waiting to look at the actual space once construction is finished before making a deal.
He added that the completion of other projects in the area, such as the Fulton Street transit hub, will be a major incentive for companies.
“As we get closer to 18 months from now we’ll see a lot more leases,” he predicted.
McQuillan agreed and said if history is any indication, the rest of the buildings will lease quickly.
The first building in the complex, 7 World Trade Center opened in 2006 and Silverstein was the sole tenant of the 52-story building. Two years later, it was completely leased out with companies including Moodys, Omnicom, Fast Company and Inc.
“[The company’s] philosophy is if you build a beautiful great building in New York, tenants will come,” McQuillan said.
***
The first four tenants at 1 World Trade Center
So far, 1 World Trade Center has 55% of its space leased out. Here is some info on its tenants.
Condé Nast: The magazine publisher signed on to the building in 2011 and is currently its biggest tenant. The company will lease 1.2 million square feet for 25 years and move 5,000 employees to the building.
U.S. Government: The U.S. General Services Administration signed a 20-year lease last year for six floors in the building.
Vantone China Center: A Chinese investment group was the first to sign a lease in the skyscraper in 2008. The group will create a chamber of commerce and cultural center that will take up six floors.
Legends Hospitality Group: The sports and entertainment company that the Yankees co-own will manage the tower’s observation deck. (Ivan Pereira)
***
A better start, perhaps
The World Trade Center complex will open during a recovery from the 2008 recession, which bodes well as commercial real estate follows economic cycles. The openings of other famous skyscrapers — the Empire State Building and the Twin Towers — were not as smooth.
Empire State Building — Opened in 1931, it was once known as the “Empty State Building” because of its struggle to fill space. The building was two-thirds empty throughout the 1930s and not profitable until 1951.
Twin Towers — The original World Trade Center buildings opened in 1973 amid a weak economy and a glut of office space due to development near Wall Street. The World Trade Center struggled for tenants and relied on government agencies to fill space. (Dan Rivoli)
Sources: Matthew Lasner, assistant professor of urban affairs and planning at Hunter College; Carol Willis, founder and director of The Skyscraper Museum.
