Leasing at World Trade Center Now Starting to Accelerate Nicely
Rendering of 3 World Trade Center – source Silverstein Properties
/ By Alan Gallindoss /
The New York Post has reported that Larry Silverstein, Chairman of Silverstein Properties, which is responsible for three of the four new towers to be built on the site of the World Trade Centre, replacing the original “Twin Towers”, has reached a preliminary agreement for advertising firm GroupM to lease offices at 3 World Trade Center. This will mark a key step for the developer to proceed with building the new 80-story lower Manhattan skyscraper, two people with knowledge of the negotiations said.
GroupM is the media buying and planning division of WPP Plc, the world’s biggest advertising company, and has agreed to take more than 500,000 square feet in the tower, which offers about 2.8 million square feet in total, said the people who asked not to be identified because the talks are private, according to the New York Post. A term sheet is reported now to be signed, with a completed lease expected by the end of the year, one of the people said. In New York real estate circles once such a term sheet is signed an executed lease almost always follows. GroupM currently has over 3,000 employees working out of three separate Midtown Manhattan locations, the largest being at 498 Seventh Avenue, an office tower in the Garment District..
Of the Four buildings in the New World Trade Center complex the first, One World Trade Center, is being built by the site’s owner the Port Authority of New York and New Jersey, together with the Durst Organization, and also Silverstein’s own 4 World Trade Center, will both be completed by early next year. 4 World trade Center actually has The Port Authority as the anchor tenant and it will also will house offices for the City of New York.
Rendering of 4 World Trade Center – source Silverstein Properties
The 72 story, 2.3 million square foot, tower at 4 World Trade Center still has about 1 million square feet un-leased. Then, the final building planned for the complex, 2 World Center, also controlled by Silverstein, remains for now strictly on the drawing board awaiting tenants.
3 WTC itself had earlier started construction of its seven floor retail and logistics component and then stopped while awaiting a lead tenant to trigger a start on the tower above it; now the wait is over it seems. Under the terms of a 2010 agreement with the Port Authority, Silverstein was required to lease at least 400,000 square feet of office space in the tower and raise at least $300 million of financing in order to qualify for US$200 million of support from each of the Port Authority, New York City and New York State, as well as for US$1.3 billion of tax-advantaged Liberty Bonds and other funding. A lease with GroupM will now release this funding.
GroupM has agreed to a 20-year lease at 3 World Trade, people with knowledge of the deal said. They plan to take 9 floors in the office portion of the tower, including five lower floors of 70,000 square feet each that were originally designed to be trading floors for an investment banking tenant. However, large securities firms have been cutting jobs and reducing their space needs in the aftermath of the 2008 financial crisis.
Officially nobody directly connected to the deal is talking yet, though. A call to Kelly Clark, North American Chief Executive Officer of GroupM, wasn’t returned. Bud Perrone, a Silverstein spokesman, also declined to comment.
If confirmed GroupM will be the first non-government, private sector, tenant in any of the three towers Silverstein has the right to build at the World Trade Center site. At One World Trade Center, the tallest building in the Western Hemisphere, publisher Condé Nast Publications Inc. has agreed to take more than 1 million square feet as the anchor tenant, leaving only 2 WTC, designed by Sir Norman Foster, yet to be leased and built at the 16-acre site.
A GroupM lease would be critical to “completion of our efforts downtown,” David Samson, Chairman of the Port Authority, which owns the whole Trade Center site, was happy to say though in a telephone interview with Business Week. “There are a lot of different pieces that need to come together in order to reach our objective of a fully built-out, fully developed and fully operational site, but this is certainly a key milestone.”
The lease would also provide a boost to lower Manhattan’s office market, where almost 10 million square feet is currently still available, according to data released last week by brokerage firm Cushman & Wakefield. In addition to the space nearing completion at the World Trade Center site, Canadian company Brookfield Office Properties, currently downtown Manhattan’s largest landlord, is still looking to fill-up office space at Brookfield Place, the complex formerly known as the World Financial Center that housed Merrill Lynch & Co.’s headquarters.
Lower Manhattan’s vacancy rate was 11.6 percent in the second quarter, compared with 10.4 percent for the entire borough, according to Cushman and Wakefield.
This deal, once confirmed, will also vindicate Mr. Silverstein, who signed a 99-year lease to the original World Trade Center property just six weeks before the destruction wrought on September 11, 2001 and he has struggled through a variety of local political scandals and funding shortfalls to bring about its renaissance over the past twelve years. It seems GroupM first expressed interest in leasing space at the World Trade Center in October of last year, but both sides have been quiet about the deal until this week; patience has now won out.