The View From 7: As Tower Tops, Goldman Sacks

The specialized glass skin designed by Skidmore, Owings and Merrill architect David Childs for 7 World Trade Center has now

The specialized glass skin designed by Skidmore, Owings and Merrill architect David Childs for 7 World Trade Center has now reached the top of the structure, meaning that the most immediate goal for the redevelopment of the site of the attack of Sept. 11 has now been reached: The skyline is restored, somewhat.

Now all developer Larry Silverstein has to do is get people to move in.

From the windswept roof on a recent foggy day, it was possible to see what surrounds the sleek, muscular and somewhat orthodox structure of 7 World Trade Center. Against one corner, to the northeast, an eyesore of a white-brick building, still pitted and uninhabited since Sept.11. To the south, the massive pit in which the Twin Towers once were anchored. A clean, smooth metallic line runs through the pit carrying passengers through the Hudson Tubes and to the nearby temporary (though quite beautiful) World Trade Center PATH station; yellow markers outline the footprints of the two towers, footprints that seem very small from 50 stories in the sky. Against its western flank, the Verizon building; restoration to the elaborate stonework near the roof said a Silverstein rep, employed stonemasons who had been working on the Cathedral of St. John the Divine. And beyond it, a parking lot-known to everyone down here as Site 26, the last parcel to be developed in Battery Park City.

That was where, until the afternoon of April 4, everybody thought that Goldman Sachs would erect its 40-story building, designed by I.M. Pei’s firm, which would consolidate its workers presently scattered throughout lower Manhattan. It was one solace to the Silverstein marketers: The views to the distance from the tower are spectacular, but the middle distance offered a stunningly cheerless view. The Deutsche Bank, still wrapped in its black shroud at the opposite end of Ground Zero and moldy beyond salvation, only adds to the discomfiture.

Across the river, the other Goldman Sachs building stood like a beacon out of the gray mass of Jersey City. That building had been going up throughout the deliberations over the World Trade Center site; now it’s up and running. Whether Goldman ever completes its building on our side of the river-the only office tower planned for lower Manhattan that could not rely on insurance money for funding-is now an open question.

And for Mr. Silverstein, who has already been taking potential renters on tours of the building and who will be setting up a sales office in the building in the next few weeks, the Goldman pullout must look like an omen.

As recently as August, Goldman Sachs appeared before the Liberty Development Corporation to argue for a $1 billion Liberty Bond to help fund construction on what was promised to be its world headquarters. Commercial construction projects downtown, according to literature produced by the development corporation, a city-state entity, are given a higher priority than projects outside of lower Manhattan.

Goldman argued the building, to rise on what had been called Site 26 since it was first marked out by the builders of Battery Park City would generate 649 full-time jobs during its construction, with economic impacts considered to be over $350 million. The building would gather the company’s existing 7,400 employees in lower Manhattan-scattered across several sites-into one headquarters, and would add about 4,000 new jobs on top of those.

In November, Governor George Pataki announced that Goldman had won control of the site. Goldman’s 740-foot-tall building, designed by Pei Cobb Freed and Partners Architects according to “green building” principles, would accommodate six trading floors at its base and about two million square feet overall. The tower would also house the company’s investment-banking and commodities operations.

Completion of the new building was slated for 2009.

The Goldman effort was offered as proof that there was a market for development in the neighborhood by private business without the benefit of the insurance payouts Mr. Silverstein was getting for rebuilding downtown.

All that remained would have been for the company to negotiate the provisions for receiving the bonds. Those negotiations likely would have involved the company’s negotiation of a ground lease for the site through 2069, sales-tax exemptions contingent upon meeting job-creation targets, and discounts on real-estate tax and utility costs.

But mysteriously, though the Mayor and the Governor both vociferously supported Goldman’s bid for $1 billion in Liberty Bonds, they never materialized. Somewhere between the first stage, with the public hearing, and the second, where the $1 billion is finally given in return for guaranteeing the interests of the city and state in job creation, the deal seems to have fallen off the table.

“A billion in cheap financing couldn’t persuade them to come to this place,” said Bettina Damiani of Good Jobs New York, which has opposed retention deals and development grants for companies like Goldman Sachs.

And then Goldman started playing hard-to-get this week over what at first seemed a minor matter of traffic engineering.

On the afternoon of April 4, Madelyn Wils, chairwoman of the local community board as well as a board member of the Lower Manhattan Development Corporation, the public-private entity charged with coordinating the downtown rebuilding effort, sent out an e-mail to her colleagues on the community board.

“I have been notified that Goldman Sachs has informed the Governor’s office and the Mayor’s office that they would not be going forward with the plans to develop their headquarters on Site 26,” the e-mail read. “This is due to an inability by the administration to find a solution to the location of the portals for the Route 9A bypass.”

She was referring to a plan backed by Mr. Pataki that would turn four of West Street’s eight lanes into express lanes and submerge them for four or five blocks, in the manner of Park Avenue in the 30’s.

From the get-go, however, Goldman didn’t like the plan. The problem was that the exit-or the entrance, depending on how you look at it-to these express lanes would be located right outside Goldman’s entrance, and chairman and chief executive Henry Paulson has said it would put employees and clients looking to get across West Street in the path of dangerously speeding traffic.

Unable to work out a compromise with the Governor, Goldman leaked word instead that it would begin looking for other locations in which to consolidate its 9,000 employees-a figure which is expected to grow to 13,000 in the next 15 years.

“We will only look in Manhattan,” said Goldman spokesman Peter Rose-faint assurance to the numerous officials and civic boosters (as well as other property owners) who were counting on a marquee name to attract other tenants right there, in lower Manhattan.

Goldman wouldn’t go into details, nor would a Governor’s office sold on the slogans of Dr. Pangloss. “The D.O.T. is studying a number of options for West Street,” said Lynn Rasic, a spokeswoman for Governor Pataki. “We are confident that when the analysis of alternatives for West Street is finished, it will allow Goldman Sachs to move forward with its plans.”

But the news signaled to others that the Governor had already made up his mind.

“One can only surmise that the Governor and his advisors were pushing forward with plans to proceed with the tunnel,” said State Assembly member Deborah Glick, who represents lower Manhattan.

Of course, Goldman may be bluffing, pushing for a more favorable recommendation from the New York State Department of Transportation, which is close to finishing its report on alternative traffic patterns. But a source close to the negotiations disputed that assessment.

“The idea that Goldman is doing this to position itself is nonsense,” said the source, adding that the bank had struck its agreement with the city and state to move in, believing that the tunnel wouldn’t exit at its front door.

“It’s probably 90-10 that they will not build,” the source said.

Goldman pulling out at this point would put a major damper on the development of lower Manhattan, and that prospect left real-estate executives either distraught or disbelieving.

“It’s hard to imagine the powers that be would let a $2 billion project like that walk away,” one executive with property in the area said. “You could not hope for a greater shot in the arm to get the process moving again.”

“He is going to have to broaden the definition of what kind of companies [locate themselves] downtown,” said Mary Ann Tighe, the chief executive of CB Richard Ellis, a commercial brokerage, of Mr. Silverstein’s project at 7 World Trade Center. Her firm is the exclusive leasing agent for Mr. Silverstein’s building.

The building still has no anchor tenant. And while Goldman proposes to stay in Manhattan, it doesn’t promise to remain in lower Manhattan.

Ms. Tighe said that traditionally law, finance and government entities took up space in lower Manhattan, but that in order to continue to develop the neighborhood, it would have to be made attractive to media companies-publishing, advertising-and multinational manufacturing companies.

“They typically want to house their business in a building that’s easily identifiable as a New York building,” Ms. Tighe said of the latter group.

She said downtown was already becoming a magnet for nonprofit companies, which presently make up 10 percent of the new leases signed downtown.

Downtown schools like Pace University are looking for space to expand into, she said, as well as the city’s major medical centers.

But, she added, 7 World Trade Center will likely still rely on major tenants in the law, finance and government categories. Citibank, she said, had just put out a request for proposals to fill its need for 200,000 square feet of office space downtown. That would be about five floors of 7 World Trade Center-hardly an anchor tenant, but something like a good start.

And, naturally, Mr. Silverstein himself-who watched 7 World Trade Center collapse late in the afternoon of Sept. 11 from the safety of a nearby high-rise-will locate his business in the building. It will give him an eagle’s-eye view of the 10 million–odd square feet of new office space he’s planning to build, including the 1,776-foot-tall Freedom Tower.

On a recent tour of the still-incomplete building, a press representative from Mr. Silverstein’s office pointed many stories below to a blue box on the muddy floor of Ground Zero.

“That’s the cornerstone of the Freedom Tower right there-the blue thing,” he said. Another tourist squinted to make it out.

Progress on the building, co-designed in an arranged marriage between site planner Daniel Libeskind and Silverstein house architect David Childs, is full swing. Still, with news of Goldman’s withdrawal, imagining those 16 acres full of bustling workers, shops and sleek office towers would seem to require all the imagination Mr. Silverstein can muster. The View From 7: As Tower Tops, Goldman Sacks