3 World Trade Center Gambit: Silverstein Could Cut Tower Short
Construction at 3 World Trade Center could be capped at seven floors if developer Larry Silverstein can’t find enough tenants to pre-lease the tower’s first ten floors, Crain’s New York reported.
Due to a 2010 agreement between the Port Authority of New York and New Jersey and Silverstein Properties, the developers of 3 World Trade Center and the surrounding complex, Mr. Silverstein has to have at least 10 of its 80 floors pre-leased to other tenants, or risk having the tower stand at the rather unimpressive height of seven stories.
There are currently four floors built at 3 World Trade Center.
A person close to Silverstein Properties told The Commercial Observer that the developer still has the remainder of 2012 to pre-lease those ten floors.
“There’s plenty of time to find a tenant and finish the tower,” said the source, who spoke on background.
As is stated in the 2010 agreement during a special board meeting held on August 26, 2010, immediate construction of the building’s podium and office tower can follow unless the developer can “pre-lease 400,000 square feet of the office tower at a minimum average rent of at least $60 per rentable square foot for the first five years of the term,” according to the agreement.
Silverstein Properties President Larry Silverstein also must lock up $300 million in financing before the Port Authority, city and state agrees to the debt on the tower.
Talks between Silverstein Properties and UBS AG collapsed last August after Switzerland’s largest lender cooled off on its idea of moving staff from Stamford, CT to the downtown tower. Had the agreement gone through, UBS would have become Tower 3’s anchor tenant.
“We are 100 percent committed and determined to build 3 World Trade Center to the top as quickly as possible,” said Mr. Silverstein in a statement released earlier today. “We agreed to a plan in 2010 that requires us to pre-lease 10 floors of office space before moving forward with the full tower. We are currently speaking with a number of potential tenants and remain fully optimistic that we will sign a lease in time to complete the tower as scheduled in 2015. That agreement, which anticipated the completion of the podium in 2013, in no way prevents us from moving full steam ahead as soon as we secure a tenant.”
A spokeswoman for Mayor Mike Bloomberg failed to see the doom and gloom of Crain’s report.
“We’re optimistic that they’ll get it done,” said the spokeswoman, Julie Wood.