Memorial vs. office space: Dicussions on fate of World Trade Center continue.

Should the World Trade Center site contain new office space? Or should the 16-acre site be used solely to create a memorial for the thousands of lives lost on Sept. 11?

With reports that site cleanup could be completed as early as June, many are pondering the fate of what most consider to be hallowed ground.

Most agree it is important to move quickly in turning what is now a hole in the ground into a lasting tribute to the victims while also helping to repair the economic turmoil caused by the terrorist attacks. But with the emotions of Sept. 11 coloring any decision about the site and the large number of people who feel entitled to have a voice in the planning process, that is often where the agreement ends.

Before leaving office, former Rudolph Giuliani made headlines when he said the site should be used only for a memorial. By contrast, Mayor Michael Bloomberg said it should contain some commercial development.

To some, building office space to replace the approximately 13 million SF of permanently lost space is as much a question of economics as government intervention.

"The desirability for office space is not just a government decision. If there's demand for the space, it will be built. If not, it won't," said Richard Ravitch, a partner at Ravitch Rice & Company LLC at a recent Associated Builders & Owners of Greater New York Inc. lunch.

The World Trade Center and housing were among issues Ravitch, who has extensive experience with both private and public development issues, discussed during his speech.

At a recent roundtable discussion hosted by Real Estate Weekly, Alliance for Downtown New York president Carl Weisbrod said it is important to remember that the World Trade Center was a transportation hub as well as a site for office and retail buildings.

"The complex was first and foremost a transportation hub and that is key to Lower Manhattan's future," Weisbrod said.

Others at the roundtable pointed out that rebuilding the structure is going to require deep public subsidies such as payments in lieu of taxes (PILOTs), federal tax-exempt debt financing, and savings in sales and other tax rebates to be economically feasible.

Without subsidies, new office buildings must command rents of $70 to $80 a SF to be profitable. Rents in downtown office buildings are about $40 a SF. From both a developer and lender's perspective, return on investment must be high enough to undertake a project of that magnitude, officials said.

"I don't think the enhancements from public financing are going to close. that gap," said Steven Swerdlow, president eastern division, CB Richard Ellis.

Others pointed out that rebuilding will require at least four years and, by that time, the new office space will be needed. Swerdlow mentioned the report completed earlier this year by U.S. Sen. Charles Schumer that explored ways the city could cope with the office space shortage. He said the city will likely revisit many of the ideas discussed in the report in the future.

Meanwhile, as the industry and others debate the future of the site, Larry Silverstein, appears poised to move forward with the reconstruction of 7 World Trade Center. Silverstein, of Silverstein Properties, signed a 99-year lease for the property just weeks before the attack, according to recent news reports.

Plans for the new building could be submitted to the Lower Manhattan Redevelopment Corp. -- the group overseeing redevelopment of the site -- within a few weeks. The Port Authority of New York & New Jersey must also approve the plans because they include a change from the original design of the building which opened in 1987, according to published reports.

Skidmore Owings & Merrill architect David Childs said plans for the building include 9-foot ceilings opposed to the 8.5-foot in the original. Plans also call for making better use of Greenwich Street, which was blocked off by the World Trade Center complex, according to published reports.