NEW YORK — The terrace offers one of New York City's most exclusive views. Perched on the 57th floor of the new World Trade Center complex, it overlooks the Manhattan skyline to the north, and the Statue of Liberty and New York harbor to the south.
Offices complete the rest of the panoramic view, their windows facing some of the city’s most beautiful bridges.
The building would be splendid if it was not so desperately empty: No company seems to want to rent out the floor space, at least not yet. Inaugurated last November, 4 World Trade Center counts about 40% of its surface still unoccupied. Moreover, the list of its tenants is itself slightly dubious, and includes among them the Port Authority of New York & New Jersey, which actually owns the site. The Authority is hoping that its presence will encourage others to follow, having already offered to sublet its offices, in case companies finally decided to apply.
The rest of the tenants are civil servants, whom the city administration seems to have sent there as an expression of the Big Apple’s solidarity. But private companies remain strangely absent. Although Human Resources managers claim otherwise, not many of them are willing to force employees to move to the new towers. The 9/11 attack in New York, which killed more than 2,600, most of whom were World Trade Center workers, continues to haunt the site.
"Their spirits are still there," whispers a woman who strides along the rooms for the first time.
After counting their dead, many of the companies that used to be based in the former Twin Towers chose to move further north, into midtown Manhattan. Finance firm Cantor Fitzgerald, whose employees alone accounted for 658, about one-quarter of the people who died in New York on 9/11, moved from the top of one of the former towers to the first floor of an ordinary building on 59th Street.
The lack of tenants is causing the administration to ask itself the radical question of whether it is worth it to carry on building the unfinished towers. This does not affect the highest tower of the new complex, One World Trade Center — dubbed Freedom Tower — which is (again) the tallest skyscraper in lower Manhattan. Still, the building, due to open by the end of the year, is only just over 50% leased.
The fate of towers Two and Three is however far from settled. The construction of the former has barely started, while the third tower is more advanced, with eight floors already built, but the risk that construction of the planned 80-floor high building could end there.
“The idea of paying more than a billion dollars in subsidies to a private investor, even as there are already such high vacancy rates in the area's real estate market, goes against public interest,” argues Kennert Lipper, a Port Authority commissioner who is vocally opposed to the project.
Chinese interest
For opponents, the project is all the more shocking since New York has countless decaying infrastructures, which the Port Authority is in fact responsible for renovating. But instead of repairing bridges and roads that need it, the administration is “financing empty towers,” he says.
On the other side of the argument stands Larry Silverstein, a billionaire investor who acquired the Twin Towers weeks before the attacks and is overseeing three of the new towers. Amputating the third tower of some 70 floors of offices could potentially mean losing hundreds of millions of dollars in rent, and the same goes if the second tower is halted.
“I’m positive we will find tenants,” assures Janno Lieber, president of WTC Properties and Silverstein’s right-hand man.
Still, he struggles to come up with names of companies that have showed recent interest. “Condé Nast,” he finally says. The media company, owner of Vanity Fair, Vogue and Glamour is indeed one of the biggest announced tenants, but its deal is hardly new, having signed three years ago. And although the newsrooms will move into its new offices in November, many concessions were made to convince the organization. The Port Authority agreed for instance to cover back rents still owed by Condé Nast for its offices on Times Square.
Notably, a Chinese group was the first to express its wish to move into Freedom Tower. A cultural center, financed by Chinese company Vantone, is thus set to welcome Chinese firms investing in the United States. GroupM, a branch of advertising agency WPP also has plans to move into Tower Three.
But apart from these three and a few public agencies, the list of suitors is virtually empty. Even banks, which for a long time caused prices to skyrocket, appear no longer willing to pay the high prices sought. Indeed, banks employ 35,000 people fewer than in 2007 and would rather invest in less expensive neighborhoods.
Goldman Sachs went as far as sending its traders to the other side of the river, in New Jersey. The Bank of New York, which occupies one of the most prestigious locations in Manhattan, 1 Wall Street, is also threatening to move across the river. “Media and advertising organizations occupy some of the space, but that doesn’t compensate for the absence of financial firms,” explains Lawrence Longua, professor at the Schack Institute of Real Estate at New York University.
The economic context is strangely reminiscent of the time of the inauguration of the original World Trade Center in the 1970s. Back then, the oil crisis had dissuaded many companies from relocating to the site. Instead, public agencies occupied the offices for more than ten years.
That said, the rent is very expensive, with a rate of about $900 per square-meter. “Real estate investors demand high rents because the towers cost a fortune to build,” explains Ben Carlos Thypin, director of Real Capital Analytics.
Even if Freedom Tower should be fully leased, it would take 35 years to pay back the construction costs, and the fact that the project is far behind schedule only adds to the bill. Back 40 years ago, it took only two years to build the Twin Towers. It will take at least 15 years before all their replacements are ready.
