World Trade Center Construction Slows As Real Estate Market Remains Weak
Two office buildings are already being constructed as the original site of New York City’s World Trade Centers but 3 World Trade Center has been slowed after just eight stories worth of construction. That’s because a tenant for the new building has not yet come forward and under a development deal with the city the building can not progress without a tenant.
The building is being constructed by Silverstein Properties run by Larry Silverstein and the deal he signed two years ago promised a tenant before construction could be completed.
The 3 World Trade Center building is expected to have 2.5 million square feet of office space but stopped at 10% completion several weeks ago. Originally it was believed to be a no-brainer to rebuild on the site of the 2001 terrorist attacks, after all New York City is one of the hottest real estate markets in the world and it had just lost 11 million square feet of office friendly real estate. Unfortunately for Silverstein Properties the market has since contracted and businesses are selling off their office space instead of buying into new space
In the past financial firms were the biggest tenants for New York City’s office spaces but they have been quickly releasing thousands of workers from their payrolls which means new office space is no longer needed. Throw in the fact that new construction means higher rental prices in lavish buildings and its easy to see why 3 World Trade Center is finding it hard to attract new businesses.
In comparison 4 World Trade Center will be completed in late 2013 and is already half leased out to government agencies while One World Trade center, a Port Authority of New York Construction is 55% leased, mostly to publisher Condé Nast. The One World Trade Center building will be completed in early 2014.
In the meantime 2 World Trade Center, also a Silverstein production, in on hold until the real estate market pics up.
Most analysts agree that the office spaces provided by the World Trade Center projects are excellent, however in 2011 40% of leases in Manhattan were renewals, more than double 2007 figures.
It’s not all bad news for Silverstein Properties, some large companies appear to be searching out new space including Time Warner, however no decisions have been reached at this time.
Silverstein believes buyers will eventually come forward and construction will reach completion.
According to the company:
“Work is continuing at the 3 WTC site. The concrete core has reached the 8th floor but perimeter steel erection is continuing. The steel perimeter will reach the seventh floor in the fall. After that, there will be another year’s worth of work on the interior. If during this period, Silvertein Properties is able to secure a pre-lease for 400,000 square feet, then construction will continue uninterrupted to the top.”
In a statement to the Wall Street Journal Silverstein properties notes::
“We are 100 percent committed to building 3 World Trade Center to the top as quickly as possible. Working with our leasing agent, CBRE, we are marketing the tower widely and remain optimistic that we can meet our pre-leasing targets over the next year, which would assure that construction continues without interruption.”