By PRADNYA JOSHI
July 3, 2005
Attention real-estate shoppers: There's a great new sale for office space
going on at Ground Zero, thanks to new city and state incentives.
And experts say those new financial lures that state Assembly Speaker
Sheldon Silver shepherded through could be just the jump-start his downtown
Manhattan district needs to help lift Ground Zero out of the political
morass that has caused one delay after another.
All in all, the new state incentives, developer Larry Silverstein's
agreement to match them, and other energy and efficiency savings could equal
as much as a $20 per-square-foot discount on the new 7 World Trade Center
and other Ground Zero buildings once they are completed. To date,
Silverstein has not signed any tenants to 7 WTC, which is scheduled for
completion early next year.
With Silverstein asking at least $50 a square foot in rent for 7 World Trade
Center, the new breaks add up to real money for companies thinking about
relocating to downtown.
"It's really changed the economics of coming to lower Manhattan versus
midtown," said Richard Kennedy, senior director at the Cushman & Wakefield's
Wall Street office.
Silverstein's exclusive brokerage firm said the incentives as well as the
near-completion date are getting clients interested.
"This is one of the most efficient, safest and newest buildings in the
country if not the world -- and it's one of the best economic values," said
Steve Siegel, chairman of CB Richard Ellis' global brokerage services. He
added his brokers have talked to law firms, investment banks and even
Silverstein said at a news conference last week announcing the new Freedom
Tower design that his phone "has been ringing off the hook" since the
incentives were offered, which will be paid for by the city and state.
Silverstein said it's too soon to sign up tenants for Freedom Tower because
that building is not expected to open until 2010, but he expects that he can
secure them for the $750-million 7 World Trade Center quickly with the
Still, real-estate brokers acknowledge that it's been an uphill battle to
get businesses to come back to Ground Zero.
Companies may be leery about setting up shop overlooking the construction
pit at Ground Zero; the transportation connections to downtown, particularly
for suburban commuters, still aren't as extensive as in midtown; and the
downtown real-estate market still has a glut of office space available.
Ground Zero is competing with nearly 12 million square feet of vacant office
space elsewhere in downtown, of which 5 million square feet is large blocks
of space that a large company may want, said M. Myers Mermel, founder of
TenantWise Inc., a firm that advises businesses on real-estate
In addition, Mermel said another 4.3 million square feet of space
downtown is not officially on the market but sits empty and could be
available for rent.
Despite those drawbacks, Silverstein Properties says 7 World Trade Center
has many assets: "green" building codes that will cut the electric costs for
tenants; natural light and special design materials to make office workers
happy and productive; and sweeping views of the harbor and the city that
many of the crowded midtown office towers can't offer.
Furthermore, with an address at 250 Greenwich St., Silverstein is also
marketing the building's proximity to trendy TriBeCa with its shops and
Brokers say one reason tenants have been keeping away has been Silverstein's
asking price. According to Colliers ABR, downtown rents averaged $33.92 a
square foot last month for the top-quality office space, which meant
Silverstein was asking more than $17 above market prices.
That extra rent is "not outrageous for a new product but sits in the context
of a lot of new vacancy" downtown, said one real-estate broker who asked not
to be named.
Siegel of CB Richard Ellis acknowledged that the downtown glut hasn't helped
but the firm also has only recently ramped up its marketing of the building.
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