Systems are go for WTC; Silverstein, PA seal deal.
The deal clears the way for the site's conversion from a sunken pit into one of the largest office, retail and transportation hubs in the city; development that was originally envisioned in a 2002 master plan of the site by architect Daniel Libeskind but which has been plagued by false starts and infighting.
The agreement appears to be the strongest guarantee yet that the long stalled construction of the site's millions of square feet of commercial space will finally begin in earnest. Indeed, after Silverstein Properties and the Port Authority entered into a preliminary agreement in April, work began on the footings for the Freedom Tower, the site's most iconic--and delayed--building that will be owned by the Port Authority but developed by Silverstein Properties.
That work, of course, was supposed to have started just after July 4, 2004, when a symbolic cornerstone for the Freedom Tower was unveiled at Ground Zero by Governor Pataki in what was meant to mark the start of that tower's construction. Instead, the site continued to sit fallow as the building underwent a highly publicized redesign to address security concerns, a setback that highlighted the site's lack of leadership and caused public scrutiny and political pressure to mount.
The current agreement imposes deadlines on both the Port Authority and Silverstein Properties. Silverstein Properties must complete Towers 3 and 4 by 2011 and Tower 2 by the end of 2012. The Port Authority has to prepare the bulk of the bathtub's eastern portion, on top of which the towers will rise, by 2007. Because that work will progress, according to a Port Authority spokesman, from the south side of the site heading north, the site for Tower 2, the second tallest building at Ground Zero behind the Freedom Tower, will be delivered in 2008.
"If Silverstein doesn't meet its deadlines for development then it will forfeit its ownership rights at the site," said Port Authority chairman Anthony Coscia, outlining the consequences for not meeting the construction deadlines.
According to Coscia, the Port Authority has agreed to pay a $300,000 penalty for every day it is late in delivering the development parcels.
The agreement shortens a development timetable that once stretched to 2015 and does away with the original master plan's graduated pace development, in which the towers would be constructed one after the other rather than simultaneously, like they will be under the current plan.
The deal partitions the site's planned commercial development, handing the Freedom Tower and a fifth development parcel at the south end of the site to the Port Authority, while leaving the site's most commercially viable properties, Towers 2, 3, and 4 with Silverstein Properties.
The divvying was prompted by the assertion in recent months by state and city officials that Silverstein didn't have the financial wherewithal to tackle development of the entire site. The agreement irons out much of the financial turmoil by providing for hundreds of thousands of square feet of pre-leasing agreements whose monetized value has been called essential by officials in the funding of the Freedom Tower and Tower 4.
That pre-leasing, as it relates to the 2.6 million s/f Freedom Tower, came into focus in recent months when Port Authority officials expressed uncertainty whether 1 million s/f of commitments they were seeking for the building would be secured in time for last week s Port Authority board meeting--what was called a deadline to determine the tower's financial feasibility.
In the weeks before the meeting, officials revealed those leases had been secured from a number of government tenants in an effort spearheaded by Governor Pataki, for whom the rebuilding has become essential and potentially damaging to his legacy.
The State Department of Labor, State Dormitory Authority, State Housing Finance Agency, State Insurance Department, State Housing Office, and Office of Court Administration were listed in an article in the New York Times as among those who would be relocating to the Freedom Tower. Officials said rents would start at $59 psf and escalate in intervals, jumping to around $65 psf within five years.
Such rents are considerably more than what those government agencies are currently paying for their office space, a fact that has stirred controversy over the wisdom of building developments that rely at least partially on what is essentially public subsidy.
The Port Authority has pledged to take 600,000 s/f in Tower 4, the smallest office building on the Site, which will also be occupied by hundreds of thousands of square feet of city government tenants.
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|Title Annotation:||Port Authority and Silverstein Properties ink deal|
|Publication:||Real Estate Weekly|
|Date:||Sep 27, 2006|
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