7 WTC Bucks Dire ForecastsDec 09, 2008
Mayor Bloomberg congratulated Larry Silverstein on the “continued success” of 7 World Trade Center last week – an overdue acknowledgment from Bloomberg, who once needled Silverstein for supposedly asking for too high a rent.
In 2005, with the tower not quite finished, Silverstein had the nerve to ask $50 a square foot or more, even though other downtown buildings would have been happy with $35.
The fact that the new 7 WTC was a vastly superior product to buildings 25 years and more older didn’t seem to impress Bloomberg at the time.
On Friday, Silverstein and Bloomberg announced that German investment bank WestLB will move from Midtown to 7 WTC, overlooking Ground Zero. The rent on 129,000 square feet will start above $70 per square foot and rise over a 15-year term.
Yet, except in The Post, the momentous news got short shrift in the media – maybe because it inconveniently contradicts all the baloney about the office market that’s become impossible to challenge. Even yesterday, one report darkly suggested the deal was an aberrational “dent” in a supposedly bleak downtown picture.
The brokers involved – including Newmark Knight Frank’s Mark Weiss for WestLB and CB Richard Ellis’ Stephen B. Siegel and Mary Ann Tighe for Silverstein – declined to comment.
WestLB will actually have less space at 7 WTC than it does now at 1211 Sixth Ave., where it occupies four floors with 160,000 square feet in the same building that is also home to The Post. (WestLB’s lease is up in 2010.)
But the bank isn’t really scaling back.
This is why new buildings are so essential for the city to remain globally competitive – the space the bank will have on 7 WTC’s top three floors is as good as the larger amount it has on four floors uptown.
That’s because 7 WTC’s floors have fewer columns than the nearly 40-year-old 1211 Sixth Ave., among other “efficiencies” that make every square foot at Silverstein’s building count for more.
After scouring Midtown, West LB started scoping out 7 WTC earlier this year, even when HSBC was also in talks – since aborted – about taking the top floors.
In the end, according to WestLB spokeswoman Connie Kain, “No. 1 was price” among considerations that ultimately made the Dusseldorf-based firm choose 7 WTC.
“We were looking for the best value in Manhattan,” she said. The $150 million aggregate rent is more than WestLB would pay elsewhere downtown, but perhaps 40 percent less than in Midtown.
If, that is, comparable space existed in Midtown.
The 7 WTC site offers state-of-the-art electronic and environmental features. The only uptown address with similar amenities on contiguous floors is 11 Times Square, where asking rents for top floors are above $100 a foot
The good news about 7 WTC doesn’t mean the commercial market isn’t in for a pounding.
Maybe, as some seem to want us to believe, a year from now Manhattan office buildings will be 50 percent empty and we’ll all be reduced to an agrarian way of life.
But in December 2008, Manhattan availability remains below 10 percent. And availability in downtown’s 85 million-odd square-foot market remains below 8 percent, a figure any other large market would love to claim.