Ward on 1 WTC: Would be ‘Pleased’ With $60 Rent
Eliot Brown May 31, 2010, 5:21 p.m.
Port Authority executive director Chris Ward apparently scheduled a few media interviews to run here during his European marketing trip for One World Trade Center (The Freedom Tower). In a Reuters story from over the weekend, Mr. Ward talked numbers on rents for the tower.
From the story:
“We’d be pleased in this market to start off with a $60 square foot rent, but if someone wanted to talk about a million square foot deal, we’re open for business,” said Ward.
“If someone wants daily access to that view from the top on the 88th floor, we’d hope to talk rents of $100 and upwards for that really valuable space,” he said.
That’s significantly lower than the $80 per square foot deal the agency struck with Beijing Vantone last year. Then again, perhaps Vantone had to pay a premium for its lack of a strong New York track record. The company had been involved with two prior New York leasing deals that had fallen through.
The calculus for pricing rents in the building is a bit different than the typical new office tower. At $3.2 billion for 2.6 million square feet of space, it is perhaps the world’s most expensive major office tower and is not expected to make money in the short- or mid-term for the agency. (History repeats itself: the original World Trade Center towers, which were also built by the Port Authority and propped up by government tenants, were a huge drain on the agency’s balance sheet for years).
While the Port Authority surely wants to be mindful about its losses, one would imagine that whoever is running the agency over the next few years will face political pressure to get it leased up, presumably leading to lower rents than comparable buildings in private hands. After all, an empty, money-losing, government-built tower is far more of a political liability than a full, money-losing, government-built tower.
The agency is also planning to bring on one of two private developers–Stephen Ross or Douglas Durst–to be the new public face of the tower. While the agency has said each is planning to invest about $100 million for a stake of the tower, it has not disclosed the details of how the winning developer would get a return on his money, making it impossible to evaluate how the deal will impact the agency financially.