Leasing woes have Coscia doubting Freedom Tower.

Despite the highly publicized agreement in April between the Port Authority and Silverstein Properties that seemed to finally put development at the World Trade Center site on the fast track, the Freedom Tower now faces a new set of hurdles before its construction can begin in earnest.

Speaking at a Crain's breakfast forum yesterday (Tuesday) Port Authority chairman Anthony Coscia hinted that the Port Authority has not yet secured the one million s/f of commitment from government tenants for the Freedom Tower, leases whose monetized value he has described as integral to the planned 2.6 million s/f tower's financing.

"In September we will know whether we can build the Freedom Tower in a way that is financially responsible," Coscia said, indicating that the tower may not be built or that its size may be reduced if the leasing commitments can't be secured. The agreement that the Port Authority and Silverstein Properties struck in April is considered a preliminary document subject to the Port Authority's final approval at a planned September board meeting. Silverstein Properties raised objections about the delay of this final approval from the outset, predicting that if the Port Authority experienced difficulty securing the necessary leases it could compromise the agreement.

"We pointed this out from the beginning," a source at Silverstein Properties said. "There were things out of our control in the agreement, and now we're going full steam ahead starting construction and the Port Authority has thrust everything back into uncertainty."

Construction on the Freedom Tower ostensibly began in April just after the preliminary agreement but Coscia said that the work so far has amounted to little more than site preparation and that construction of the actual tower is contingent upon securing the one million s/f of government leases.

Security concerns have plagued the Freedom Tower because many consider it a prominent target for potential future terrorist attacks, a stigmatizing perception that some real estate experts feel could curtail leasing. Last April an NYPD report outlining the building's security flaws prompted the tower's total redesign and its placement further from West Street. Coscia admitted during his talk that even Port Authority employees have expressed a sense of trepidation about moving into the building.

"There is a substantial amount of concern from a group who has suffered two major attacks," Coscia said. "But it's a move that is supported."

The Port Authority is among the government tenants expected to take space within the Freedom Tower.

Coscia did say though that he is optimistic that the Port Authority will be able to lease the space it has said it would, even though the deadline is roughly three months away and leases for large chunks of space often take many months to negotiate.

"The plan was that we'd enter into leases to get the project done," Coscia said. "And nothing has happened that makes us believe that won't happen."

The difficulties that the Port Authority seem to be facing in leasing up the Freedom Tower bring into serious question its ability to provide the 600,000 s/f of space commitments from government tenants it pledged as part of the April agreement to bring to Silverstein Properties' Tower 4. As part of the preliminary agreement, Silverstein Properties gave up control of the Freedom Tower but retains the right to develop Towers 2, 3, and 4, considered the most commercially viable developments on the site because of their larger floorplates and better proximity to the area's transportation hubs.

"Larry will build those towers whether the Port Authority bring tenants or not," the source at Silverstein Properties said.