Ground Zero projects may be put on hold

Source : Business Times - 21 Apr 2009

Construction of several office towers at the World Trade Center site could be put off for decades because of the failing real estate market, the site’s owners said on Thursday.

An analysis projected that one skyscraper might not be built and occupied until 35 years after the Sept 11, 2001, attack which destroyed the complex. Developer Larry Silverstein and the Port Authority of New York and New Jersey have been talking on and off for months about rewriting a three-year-old agreement that gives the developer rights to build three out of five towers planned for the site.

Mr Silverstein, unable to obtain financing for all the towers and with only about US$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 American International Group from downtown Manhattan as a reason not to flood the market with 10 million square feet of office space at the same time - about 2013.

Mr Ward also said that Mr Silverstein was free to build his three towers on his own.

‘Mr Silverstein is asking the public sector to finance, in fact, his buildings,’ Mr Ward said. Mr Silverstein ‘is seeking the Port Authority’s capacity to finance office space downtown’. Janno Lieber, who oversees the trade centre site for Mr Silverstein, said on Thursday that guaranteeing financing for Mr Silverstein’s towers would help generate commercial rents the Port Authority could collect for the 90 years remaining on Mr Silverstein’s lease.

‘Most important, from a public standpoint, this allows the Port Authority to honour 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 that it is responsible for building. Mr Silverstein’s other towers should be built whenever the market improves, Mr 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 built 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.’

The lease requires Mr Silverstein to build his three towers by 2013 or forfeit rights to them.