Because of the recession, failing real estate market and building costs the construction of office towers at the site of the WTC could be put off for decades. Analysis projections show that just one skyscraper could be built and occupied by 2036.
The Port Authority is dealing with the recession just like much of the world. Developer Larry Silverstein has been unable to secure financing for all of the towers and there is only $1 billion left in insurance money to pay for their construction.
The more the recession hits the harder the money will be to complete the project. About a week ago the Port Authority did agree to back about $800 million in financing but will that be enough.
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.
With the exodus of heavy hitters like Merrill Lynch and AIG from downtown Manhattan there is question also as to the need for the towers until about 2013. The Port Authority is now saying until the demand for office space is here the second two towers shouldn’t be completed. But considering the wording of the original leasing documents that would put Silverstein in jeopardy.
CBS 4 reports:
“The Port Authority’s obligation is to rebuild the site in the public interest based on the economic reality today,” the agency said in a statement. “That starts with keeping the memorial and the other public infrastructure on the timeline and budget we’ve committed to, and it extends to building the right amount of office space to meet what is now a very different market downtown.”
Silverstein has been asking the Port Authority to guarantee the financing of two of his towers. By doing so Janno Lieber, who is overseeing the trade center site, the Port Authority could collect for 90 years of the remaining lease that Silverstein has.
The Seattle Times quotes Lieber:
“Most important, from a public standpoint, this allows the Port Authority to honor its commitment to rebuild lower Manhattan – a promise that the agency has made many times since 9/11,” he added.
Analysis prepared by Cushman & Wakefield for the Port Authority sees that while two of the towers could be built by 2013, the second tower would not be fully leased until 2025. The third tower wouldn’t be built and leased until 2035.
Because of the wording of the lease Silverstein has to have all three towers built by 2013 or he will forfeit the rights to them.
“The option to build ‘stumps’ instead of gleaming office towers must be rejected, as it would be a failure from which the site as a whole may not soon recover,” wrote Gary La Barbera, president of the Building & Construction Trades Council of Greater New York.
The new proposals have not yet been rejected by Silverstein but he’s not going to sing on the dotted line until a new deal is in place.
Silverstein is currently being paid $300,000 a day in late fees for not having the land completely excavated.
The Seattle Times reports:
“If you don’t have commercial tenants demanding the space, I don’t see it being developed,” Kathryn Wylde, chief executive of the Partnership for New York business group said. But she wondered at projections like the 2030 date, saying demand for new office space in lower Manhattan would happen long before that.
“It may take five years, it may take 10 years,” she said, “but it’s not going to take 21 years.”