Developers, Pataki Making Huge Plan for New Skyline

Almost from the moment the Twin Towers crumbled, the people who plan and build New York-real-estate developers, union leaders, government officials, urban planners and architects-began pondering how to rebuild. After a week of whirlwind meetings and unprecedented ferment, the outlines of a plan have begun to take shape.

According to state officials and members of the real-estate community, the reconstruction plan being developed would set aside for now the idea of rebuilding the World Trade Center itself. Instead, city and state agencies would focus on speeding the construction of office buildings on sites in Manhattan, Brooklyn and Queens controlled by private developers, sweeping aside time-consuming regulatory processes and perhaps using federal disaster aid to subsidize construction.

At least 10 projects are under consideration, including two properties in Battery Park City controlled respectively by Brookfield Financial Properties and Edward J. Minskoff; development sites owned by Douglas Durst on 42nd Street and 57th Street; a parking lot on 42nd Street and Eighth Avenue owned by developer Howard Milstein; a planned office tower above the Port Authority Bus Terminal; sites controlled by Brookfield and landowner Harvey Schulweis on the far West Side near Pennsylvania Station; the new New York Times Building planned on Eighth Avenue; and sites along the East River in Queens and in the Metrotech Center in Brooklyn.

All of those projects call for office buildings far smaller than those of the World Trade Center. And just a day before the World Trade Center attack, all faced enormous hurdles-chief among them, finding tenants in a chilly economic climate. All, however, were at an advanced stage of development and could begin construction soon, according to state officials.

The need and incentive to build are now enormous. The cost of the World Trade Center’s collapse on Sept. 11 is incalculable in human terms or in terms of damage to the city’s psyche. But in terms of real estate, the loss can be measured in stark, if gigantic, numbers: 12 million or more square feet of office space destroyed; an estimated 13 million more square feet damaged and unoccupied. The equivalent of 25 skyscrapers, or more than 10 percent of Manhattan’s entire stock of top-quality office space, gone.

Mr. Durst, a member of the New York City Real Estate Board’s executive committee, said that officials from the Empire State Development Corporation had begun notifying him and other developers of the 10 potential sites of their plans.

“What they’re talking about is accelerating the process for those sites,” said one real-estate executive who has kept abreast of the plans.

Michael Carey, president of the New York City Economic Development Corporation, said on Sept. 18 that the plan may include direct subsidies to real-estate developers. “We’ll be looking at all sorts of opportunities to accelerate development and bring on-line commercial space.”

Those involved in the process stress that the reconstruction plan is still preliminary. “A master plan comes later, what to do with the World Trade Center [site] comes later,” said Charles Gargano, chairman of the ESDC.

But plans are moving forward with a swiftness unprecedented in the delay-ridden days before Sept. 11-and ideas, such as subsidizing private commercial developers, are being floated that were politically unthinkable in a New York City less terrified about the economic fallout wrought by the terrorist attacks.

The political and legislative efforts have already begun. “The skyline will be made whole again,” Mayor Rudolph Giuliani declared the day after the attacks. And by Sept. 16, City Council Speaker Peter Vallone had announced plans to amend the City Charter to create a reconstruction commission, led by a chairman with powers to speed construction unseen in the city since the days of Robert Moses.

The makeup and responsibilities of the commission remain foggy, however, and state officials suggested that much of its authority might overlap with the ESDC, which possesses wide-ranging powers to condemn and redevelop land.

Meanwhile, Senator Charles Schumer, who headed a commission that released a report on the city’s office-space shortage earlier this year, met with members of the Real Estate Board on Sept. 17, and secured the board’s commitment to prepare a rebuilding plan within a week. Mr. Schumer told the board he would take the plan to Washington and plead for emergency relief in addition to the $20 billion Congress has already appropriated.

The other players in the construction race are also pushing forward. Union head Edward Malloy, president of the Building and Construction Trades Council, has told the Real Estate Board he will attempt to recruit union construction workers from outside the city to handle an anticipated labor crunch-a shortage likely to be compounded by the lengthy cleanup effort expected at the Trade Center site. And on Sept. 17, representatives of the city’s major architectural firms met to discuss forming a consortium to parcel out the expected onslaught of rush design work.

“Not in my lifetime,” said Bruce Fowle, one of the organizers of the meeting, had members of his jealously competitive profession agreed to such cooperation.

Indeed, as the horror of the disaster subsides, many in the city’s real-estate and planning communities have become infused with a rare sense of possibility, born out of a crisis mentality and the promise of billions in government aid. The twin monoliths of the Trade Center-which many in the real-estate industry considered impractically huge-may be replaced by something different, they said, a panoply of new skyscrapers built to a more human (and less easily targeted) scale.

“In the adversity, the tragedy, the horror, maybe there’s a way we can do it better next time,” said developer Richard LeFrak.

“We’re beginning to think about the need for a strategy to rebuild that would commemorate the people who died here and try to find some meaning,” said Robert Yaro of the Regional Plan Association. “I think, in a sense, probably the best vindication for what happened-the best response to these terrorists-is to build an even better city.”

For New York’s real-estate industry, there is financial opportunity in the tragedy as well. “This is the only industry where people are going to make money as a direct result of this,” one insider observed in the immediate aftermath of the collapse.

Real-estate developers-many of whose families have been in the building business for generations-often speak in platitudes about their obligation to the larger New York. The coming weeks and months will be sure to test the balance between what they say and what they do to make a profit.

Yet the events of the last week, reconstructed from numerous interviews with brokers, developers and industry representatives, indicates that-so far, at least-civic duty triumphed most of the time.

“After the initial shock,” said Steven Spinola, the president of the Real Estate Board, “we began thinking about what we could do.”

Working Fast

Mr. Spinola’s work began within 24 hours of the towers’ collapse. Early on Sept. 12, he made his way down to the city’s makeshift emergency command center on the Hudson River. There, in a cavernous hall, he met with a group of Mr. Giuliani’s top deputies, including Robert Harding, the Deputy Mayor for Economic Development and Finance, and Joseph Rose, the City Planning Commissioner.

The officials asked Mr. Spinola what the real-estate community needed to get the World Trade Center’s tenants-thousands of surviving workers-back in business in new offices.

In fact, that task was already underway. Within hours of the Trade Center’s collapse, brokers around the city were working the phones, trying to match the newly homeless with what precious little office space the city had to offer. In a moment, New York’s real-estate market had gone from being flooded with supply-space left empty by downsizing businesses and bankrupt technology companies-to feverish demand.

“People are really panicking in terms of getting into space,” Barry Gosin, vice chairman and chief executive of the real-estate brokerage Newmark & Company, said on Sept. 13.

Some landlords, one disgusted industry figure said, could hardly contain their glee: “They’re rubbing their hands together.”

Some brokers moved with an aggressiveness that raised eyebrows, and there were reports of rents raised in response to the tragedy. But such cases were the exception, most brokers said.

“It’s interesting. Some people have taken a very moral and ethical approach and have not increased prices,” said Julien J. Studley, whose real-estate brokerage is still missing two employees from its World Trade Center office. “Some people, as you have in this world, are taking full economic advantage of it.”

Mr. Spinola laid out the dangers at an emergency meeting of the Real Estate Board, right after his talk with Mr. Giuliani’s deputies. His argument to hold the rent line, however, appealed to both their hearts and the bottom line: Profiteering from the tragedy, he said, could lead to government price controls on office rents.

Still later that afternoon, Mr. Giuliani underlined the threat in a meeting with business leaders, including Mr. Spinola and real-estate developers Jerry Speyer and Burton Resnick, by saying he would invoke his Mayoral powers to punish price-gouging in a time of crisis.

Mr. Spinola, whose organization is also serving as an information clearinghouse, subsequently circulated a letter among Real Estate Board members, calling on landlords to offer office space at the prices sought the day before the tragedy, and asking brokers to give up their commissions on leases secured for Trade Center tenants.

Mr. Durst said that in cases where morality doesn’t prevail, the ESDC is considering whether to use its condemnation powers to take control of empty space.

The pace of lease deals was such that brokers predicted most of the displaced tenants would have new homes within days. “I think within a week it will all be done,” Mr. Studley said on Sept. 13. “It’s all quite extraordinary.”

Where were all the refugees going?

Many, like the employees of Morgan Stanley Dean Witter, were absorbed into other buildings their companies occupied in the New York area. Financial companies like Lehman Brothers and American Express quickly found office space in new office developments in Jersey City. But, as reports of an out-of-state exodus broke last week, businesses looking to follow them found that, in fact, New Jersey was closed-there was hardly any space left.

But Jim Whelan, the director of the Downtown Brooklyn Council, said his organization had located a million square feet of office space in the borough, and a real- estate broker said one displaced company, Empire Blue Cross, was already negotiating for space in the Metrotech Center. The Brooklyn Chamber of Commerce, Mr. Whelan said, was taking up a collection of old office furniture for dislocated tenants.

Developers who had unwisely loaded their buildings with technology companies suddenly found their vacant office space in hot demand. At the Woolworth Building, which had been renovated and rented to several troubled technology companies, owner Steven Witkoff said he was negotiating with a number of World Trade Center tenants, including the Securities and Exchange Commission. There was thought of ditching a plan to convert the Woolworth’s upper floors to condominiums if the demand for offices proved strong enough-an idea, said Mr. Carey, that other residential developers might be encouraged to pursue.

Yet the long-term picture is more complicated. The foremost danger, said Jonathan Bowles, research director of the Center for an Urban Future, is that companies that were happy to be in the financial district until Sept. 11 might now look for new offices in the suburbs, or across the Hudson.

“In the long term, I think it’s very important for the whole country to make sure these companies come back to New York City and renew their faith in Manhattan,” Mr. Bowles said.

Mr. Durst said it would be essential to use some of the aid money to build new office space, and he added that he, at least, would sacrifice some immediate profit in order to start quickly.

“We will be making our sites available at a limited return in order to speed up the development process,” he said.

As the reconstruction project continues, many difficult questions will have to be answered. For instance, what will these new buildings look like?

Mr. Fowle, the architect, said he thought fears of working in a high-profile office building-expressed since Sept. 11 by workers from the Empire State Building to the Condé Nast Building-would soon subside. “I would hope that people wouldn’t be that timid and narrow-minded. We still have to be a society,” he said. “[But] would someone want to do something more dominant than the Empire State Building? I would say probably not.”

There will also be a tension between the need to build quickly wherever development sites are available and the need to rejuvenate the devastated financial district.

“While alternative development sites are being identified and even when construction gets underway, both in lower Manhattan and elsewhere, there’s a real need to plan effectively for lower Manhattan’s future,” said Carl Weisbrod, president of the Alliance for Downtown New York.

Public officials still need to determine precisely how much disaster aid will be available. Congress has appropriated $20 billion, but that’s sure to go fast given the monumental nature of the cleanup project at the World Trade Center site. At his meeting with the Real Estate Board, Senator Schumer said he was preparing to go back for more.

“We have [President George W. Bush's] ear, and that’s something we’ve never had before,” said Schumer spokesman Bradley Tusk. “We said, ‘Let’s use this good will to help New York recover from this.’”

Better Safe

What kind of changes will New Yorkers see in the places they work? For starters, more security. New Yorkers “have all of a sudden been brought into the real world,” said Mr. Studley, who escaped Belgium in 1943.

Real-estate broker Mary Ann Tighe of Insignia/ESG recalled tenants who, earlier this year, balked at taking space in the proposed office tower above the new New York Stock Exchange because of a security plan that called for streets closed off by security checkpoints and the X-raying of visitors and packages. “It may well turn out that what seemed like an extreme security plan four months ago will be just what everyone is looking for,” Ms. Tighe said. (As for the stock-exchange project itself, Mr. Carey said the city had given it little thought since the disaster.)

And finally, what happens to the disaster site itself? Since last week, the city has been awash in ideas for memorials, parks and new towers. Larry Silverstein, the developer who just signed a $3.2 billion long-term lease for the towers earlier this year, and who also owned 7 World Trade Center, has repeated many times in recent days an emotional vow to rebuild. But with estimates that it will take a year or more to clear the site, and with the near-inevitability of lawsuits that will last much longer, fellow real-estate executives say that Mr. Silverstein’s pledge is very much in doubt. And besides, who would work in a rebuilt Trade Center?

“The World Trade Center was dubious from the beginning in terms of need and sensibility,” Mr. Fowle said.

Mr. Fowle and others urged that time be taken to assure good planning and design.

“This is one of those times,” said Mr. Weisbrod, “when both speed and rationality are called for.”