New Towers Likely to Be Smaller
Towering buildings are expected to again rise on the site of the ruined World Trade Center, but the new complex will most likely be far smaller and far less ambitious.
Although some question whether many businesses would ever want to lease in such an infamous piece of property, redevelopment of the 15-acre parcel into modern office space is critical if lower Manhattan is to remain a global financial center, say real estate observers and business leaders.
But constructing a complex even half the size of the World Trade Center would still rank as one of New York’s and the nation’s largest commercial real estate projects. It would require a powerful partnership between public and private interests to overcome huge financial, political and logistical hurdles.
“It will be a massive redevelopment,” predicted real estate advisor Ray Cirz of Integra Realty Resources. But “you are not going to see what was there before.”
There have been numerous calls to reconstruct the twin, 110-story complex as a point of national pride as well as a business necessity, and New York officials have unveiled plans to form a high-powered reconstruction commission to oversee recovery efforts as well as redevelopment.
“If we do not develop that site, then we have bowed to the pressure of terrorists,” said Andrew L. Farkas, chairman of Insignia Financial Group Inc., which owns the city’s largest real estate brokerage firm. “It’s feasible, and it’s entirely possible.”
Farkas said he supports re-creating the World Trade Center--which included more than 13 million square feet of space--on a similar scale.
But others are skeptical about the wisdom of matching the World Trade Center in capacity or height. Duplicating the twin towers alone would cost a minimum of $3 billion to $4 billion and would require tenants to pay much higher rents, according to real estate experts.
A new World Trade Center might have to compete with other New York developments seeking to capture the same group of displaced tenants. Tenants might be hesitant to concentrate so many employees in one structure.
Monday’s return of trading on the New York Stock Exchange also served to reinforce the view that financial firms don’t need a physical presence within walking distance of Wall Street for financial markets to operate.
“I think it would be a foolish real estate decision” to duplicate the towers, said Richard Peiser, a professor of real estate development at the Harvard University Design School. “It was too big to begin with.”
New York real estate veteran Julien J. Studley said that perhaps only half of the space that has been destroyed might need to be replaced as Wall Street firms continue to downsize or expand in other locations.
“There’s no question we need a certain amount of space where the World Trade Center was,” Studley said. “It’s the only available site of this size that we can build on. But I don’t think we need another 100-story structure.”
Duplicating the World Trade Center’s size would be difficult given the unique circumstances under which it took shape over nearly two decades.
The project required years of intense wheeling and dealing among a powerful and unprecedented coalition of political and business leaders, including David Rockefeller, then president of Chase Manhattan Bank, and his brother, then-New York Gov. Nelson Rockefeller.
As a result of business and political pressure, the Port Authority of New York and New Jersey broadened its focus and jumped into the redevelopment and commercial real estate business on scale never seen before or since.
“It was unusual thing for a regional transportation authority to do . . . backed by the business elites of lower Manhattan,” said Lynne Sagalyn, director of the real estate program at the Columbia University Graduate School of Business.
The project remained on track even as many questioned its financial feasibility, and it opened amid the recession of the early 1970s. Eventually, several state agencies leased huge blocks of space to help stabilize the project.
“It was not economically viable when it was done the first time,” Cirz of Integra Realty said. “It was done because the port authority wanted it done.”
One of the major issues to be resolved is who would take the lead in reconstruction. The once-cash-rich port authority retains title to the property but is not expected to resume its role as primary developer because it is again focused on transportation.
New York real estate magnate Larry Silverstein, who with partners purchased a 99-year lease on the property this year for more than $3 billion, has said the complex should be rebuilt. But it’s not clear whether he would have claim in the redevelopment.
“The rights to rebuild do not belong to him,” Sagalyn said.
Reconstruction probably will include a consortium of private developers with substantial government involvement, say real estate analysts. Given its high profile, “it’s going to have some unique subsidies available to it,” Peiser said.
The public approval process is expected to be long and could lead to some dramatic changes. For example, more of the site could be devoted to open space, housing and cultural attractions, as well as a memorial, and less to office space.
“Nothing is going to happen fast,” Sagalyn said.
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Bloomberg News was used in compiling this report.
