The Port Authority Pays

If we are to take the latest Ground Zero proposals seriously (see below), consider this: Why is the Port Authority offering to pay more rent at the World Trade Center than it is obligated to?

The Port Authority owns the site and used to keep its headquarters in the twin towers. When they leased the buildings to Larry Silverstein, they made sure to secure a cheap rent, so they could stay on. That lease remains in effect. Here’s Port Authority spokesman Steve Coleman in a March 17 e-mail:

Under the Port Authority’s space lease with Silverstein Properties approved on April 26, 2001, the Port Authority was entitled to 725,000 sf of office space and 110 parking spaces in 1 WTC after the net lease was finalized in July 2001. The fixed rent for the office space was $22/sf for the first five years. That rent escalated every five years through the 20-year agreement.

But under one of the proposals outlined yesterday, according to The New York Times, “[T]he city and the Port Authority are offering to lease 1.2 million square feet at market rates.” At market rates? Downtown space is these days renting for about $35 a square foot annually, according to the latest Cushman & Wakefield figures.

In other words, the Port Authority will be paying about $10 a square foot more than what they are eligible to pay under the current lease with Silverstein.

-Matthew Schuerman