It has been a banner year for 1 World Trade Center. Now that construction has risen above street level and continues ever higher at a brisk clip, all the questions and complaints about the nine years it has taken to reach this point have seemingly evaporated. Things are so good, the Port Authority has lured Douglas Durst into a stake in the completed tower and Conde Nast is poised to move in upon the tower’s completion. Plus the Port finally reached a final agreement with Larry Silverstein for finishing the rest of the site. (Yes, it has taken this long.) With the–overly–symbolic 10th anniversary of 9/11 one year away, what could possibly go wrong?
Enter Joe Nocera and his Saturday column in the Times:
With an expected completion date of 2013, 1 World Trade Center is the most expensive skyscraper ever constructed in the United States, with a price tag currently estimated at $3.3 billion. By contrast, the spanking new Bank of America Tower in Midtown Manhattan cost about $2 billion. That is pretty much the going rate for building new skyscrapers in New York City. Just to break even, 1 World Trade Center will require rents far higher than the going rate in Midtown, much less downtown New York, where the building is located and where rents are considerably lower.
Since 1 World Trade Center is owned by the Port Authority of New York and New Jersey, it seems fair to assume that any shortfall between the building’s annual rental income and its carrying costs will most likely be borne by the people who pay the toll to cross the George Washington Bridge, or use the Lincoln Tunnel, or ride the PATH rail system, all of which the Port Authority controls. It also seems fair to say that no private developer in his right mind would build a $3.3 billion high-rise office building in a marketplace that tops out at $2 billion. Only a government entity would do such a thing. My plan was to question whether 1 World Trade Center really made sense for the city and its taxpayers.
Nevermind that Mr. Nocera spends the rest of his column repudiating what he wrote at the start, hearing from the Port that $1 billion in insurance proceeds will help defray the cost of the tower and keep rents below his predicted $130-a-sqaure-foot break-even point. Nevermind that he talks to Douglas Durst who admits that, yes, he remains skeptical of the project, but he was also skeptical of Times Square, and look how that turned out.
What is really annoying about Mr. Nocera’s column is his high-minded tone, as though nobody but him had bothered to even look at this stuff before. Not his own paper, and certainly not the one you’re reading right now.
Yet it is helpful to be reminded that no project, least of all this one, with its government fiats and thousands of stakeholders and emotions, should go up without thought or deliberation. There are still very real questions surrounding the project, like who will fill this tower, let alone the three next door, what with projects like 15 Penn Plaza and Hudson Yards–maybe, probably, hopefully–coming online. If the economy does not recover, and fast, the city’s commercial landlords could be looking at a Lost Decade of their own.