Last week, the race to buy a stake of One World Trade Center narrowed to three old names in New York real estate.
The trio left to fight it out, down from an original six: Mort Zuckerman, Douglas Durst and Stephen Ross-the chairmen of Boston Properties, the Durst Organization and the Related Companies, respectively. Each has amassed a giant war chest intended to buy up new properties, and each proclaims they covet the idea of being the public face for what will be the city’s tallest building.
The contest is less about the financials-each has offered around $100 million in a deal that could bring a greater return than a standard equity stake-and more about bringing in a big name with the ability to score tenants and help guide construction for the government-developed building still largely known as the Freedom Tower.
According to multiple people familiar with discussions between the Port Authority, the tower’s developer, and the bidders, their respective pitches have highlighted the following:
• Mr. Ross, the builder of the Time Warner Center and owner of the Miami Dolphins, has positioned himself as a seasoned builder who works well with government and has an international presence (Related has noted that it has offices in China and the Middle East). He is partnered on the deal with David Levinson, chairman of L&L Properties and a former office broker, and people involved say Mr. Ross has been an aggressive salesman.
• Mr. Zuckerman has pushed his experience as a national office developer and landlord, one who works extensively with government tenants-One World Trade is slated to be more than one-third filled with federal and state offices. He nearly put up a tower on Eighth Avenue this past cycle before one of the two anchor tenants dropped out, and he has a significant presence in Boston and Washington.
• Mr. Durst has advertised his company’s recent successes. He built and fully rented out two giant midtown office towers, most recently the highly successful Bank of America tower in midtown. Mr. Durst tends not to do layoffs at his company, and thus the leasing and construction team that worked on Bank of America is still in place.
In effect, the Port Authority is looking for a building manager with a small stake-a household name in the real estate world who will be able to draw both international and local tenants.
“We really do want a private spokesperson for this project, and we want to know that there’s going to be very significant allocation of time from these developers,” said Tara Stacom, vice chairman at Cushman & Wakefield, the firm handling leasing for the tower and advising on the developer sale. “This is a global icon, and we intend to brand it as such.”
For Messrs. Durst and Zuckerman, the recent history of bidding on major public projects may be troubling: Mr. Ross tends to win.
Related, which seems to bid on most every large development going on in the city, edged out Mr. Durst to win control of the 26-acre West Side rail yards in 2008, and then tried to woo the tenant Mr. Durst had signed to his losing bid: Condé Nast. In 2005, Mr. Ross bested a bid by Mr. Zuckerman to expand Penn Station into the Farley Post Office, a project that also envisioned a new office tower.
The three also once courted a single tenant in a contest a decade back, according to a New York Times article then: All three offered plans to build a tower for Random House. Again, Mr. Ross won.
Here, however, he has less experience than the other two in building office towers-although his partner, Mr. Levinson, owns significant office space-and he also has far more going on elsewhere, which could prove a distraction.
The next stop for the developers: the Port Authority board. The authority, which expects to take a loss on the tower given its tremendous $3.2 billion cost, expects that the teams will each present to board members before its June meeting, when it hopes to make a selection.
ebrown@observer.com
