Goldman deal good news for tenant-hungry 7WTC.

Goldman Sachs' decision last week to build a 2 million square foot office building downtown, months after the investment bank seemingly shelved development plans, may spell good news for neighboring 7 World Trade Center.

Less than six months from its opening and with a measly 20K s/f of commitment, 7 WTC has been locked in something of a leasing rut. But commercial real estate experts say that Goldman's presence on Site 26, which borders Ground Zero, could bring to the area a number of firms ancillary to the investment bank's business, some of whom may wind up taking space at 7 WTC.

"The Goldman Sachs deal is tremendously positive for the downtown," said broker, Adam Foster, who is part of the CB Richard Ellis leasing team charged exclusively by developer Larry Silverstein with filling the building. "We could see a lot of software and computer companies, law firms and financial firms who work heavily with Goldman Sachs come into the area and that influx will be good for 7 World Trade Center."

Foster noted that the building is already generating "tremendous attention" and has is drawing packed tours of potential tenants.

"We're seeing a very diverse mix," Foster said of the parties potentially interested in building. "Everything from financial firms to law firms to media firms to publishing."

Foster declined to name potential tenants or reveal if any deals are in progress.

"It's very positive for downtown," said Peter Riguardi, president of Jones Lang LaSalle's New York City offices. "Any commitment to downtown like Goldman Sachs's sends a message to other firms that this is the place to be."

While the scheduled 2009 completion of Goldman's tower won't necessarily spur tenants to flock to the area overnight, the firm's announcement of its plan to build brings closure on where it will base operations. Just months ago, when a deal between the city and Goldman crumbled over security concerns and the planned construction of a West Street tunnel whose entrance would be in direct proximity to Site 26, rumors abounded that Goldman might move to Midtown or even out of Manhattan altogether.

Now, many firms for whom the location of Goldman's headquarters is influential over their own real estate decisions--and who may have hesitated in committing to downtown in order to await the outcome of Goldman's decision --may feel more comfortable committing to the area.

Any deals at 7 WTC that stem from Goldman's entrance to the Ground Zero neighborhood wouldn't be the first in the building to result from the perceived attractiveness of being close to a neighbor. American Express Financial Services, a spin-off of American Express and the only firm to have signed for space so far in 7 WTC, was believed by many leasing experts to have taken the space in part due to its proximity to 3 World Financial Center where American Express has its headquarters.

Goldman Sachs is committing to maintaining more than 9,000 employees and a significant part of its trading operations in Lower Manhattan through 2028. In addition, Goldman Sachs anticipates creating approximately 4,000 new jobs by 2019. Construction of the 43-story office tower is expected to begin later this year with initial occupancy scheduled in 2009. The total cost of the project is estimated to exceed $2 billion.

It will be partially financed with up to $1.65 billion in Liberty Bonds which were made available by the Federal Government after September 11, 2001 to spur construction projects downtown. Goldman Sachs is also eligible for up to $25 million in Job Creation and Retention Program funds.

Under the Lower Manhattan incentives legislation and the ground lease with Battery Park City Authority, a sales tax exemption on construction costs, initial fit-out expenses and equipment purchases is also available.

The total discretionary incentive package provided to Goldman Sachs is worth $115 million, independent of PILOT Payments, in state and city funds over the same period.

In addition to ground rent, Goldman Sachs is expected to pay approximately $150 million in civic facilities fees to the Battery Park City Authority during the term of the lease.

In addition, as a contribution to the new neighborhood, Goldman Sachs has pledged $3.5 million to the New York Public Library branch planned for a site at Murray Street and North End Avenue.