The Battle For Ground Zero, Part 148

Moody's Investors Service has signed a letter of intent to lease 15 floors of 7 WTC. That would make Moody's the single largest tenant at the recently completed building.

Moody's Investors Service, the financial rating agency, signed a letter of intent on Friday to occupy 15 floors in the 52-story tower, which officially opened in May. Moody's, the executives said, plans to sell its cramped 55-year-old headquarters a few blocks away at 99 Church Street.

The move bodes well for both Mr. Silverstein and the downtown real estate market, which has suffered a high vacancy rate since the terrorist attacks of Sept. 11, 2001. Developers usually find a deal with an anchor tenant before beginning construction. But Mr. Silverstein built the $700 million glass and stainless steel tower largely with insurance money and tax-free Liberty bonds, so he could afford to wait for the right tenant.

Until the deal with Moody's, Mr. Silverstein had been able to attract only a handful of tenants for eight floors. He also held out for a premium rent downtown.

But in recent months, real estate brokers say, skyrocketing rents in Midtown and a dearth of large blocks of space are prompting tenants to look downtown, where rents are 30 percent less than in Midtown.

Moody's decision to move into 600,000 square feet at 7 World Trade Center reflects a growing confidence in Lower Manhattan, the brokers said.

And that bodes poorly for the Times own skyscraper going up in Midtown, which is a direct competitor to 7 WTC for tenants. It also suggests that Bloomberg and other naysayers about office space downtown might be quite wrong about the prospects for space in Lower Manhattan. Also, this announcement makes Silverstein look even better when compared to the inactivity and lack of progress on the rest of the site. Steve Cuozzo notes:

Under the 20-year arrangement now being worked out, Moody's will occupy floors 13-27 of 7 WTC and move in by September 2007.

A Moody's lease would be a blockbuster breakthrough for Silverstein at recently opened 7 WTC, where a temporary scarcity of tenants has been blamed by Mayor Bloomberg on Silverstein's demand for $50-plus per square foot.

Although new Midtown buildings now fetch $75 and up, Bloomberg thinks Silverstein should charge $35 a foot - the rate at downtown addresses 25 years older.

So, compared to Midtown, a business moving into 7 WTC not only gets a brand new building that has various tax breaks and other incentives, but a rent that is significantly below the price paid in Midtown. And the deals become more attractive as the transit links downtown undergo their renovation and expansion via the Calatrava transit hub at Ground Zero and the MTA's Fulton Street Transit Center over the next few years. Companies inking deals now are taking advantage of the lower rents downtown, plus the knowledge that the transit situation in Lower Manhattan will be significantly improved in coming years.

Meanwhile, via Curbed, a Test of Wills has a photo of the new ad campaign hinting at what will be coming to Ground Zero - a whole host of architectural splendor.

UPDATE:
The AP notices the building boom in New York City, including around Lower Manhattan. The writer is sure to note that the construction, including Ground Zero rebuilding, is causing consternation among some locals, who complain about the noise and that the construction often starts before 7am, forgetting that the construction at that hour is meant to lessen congestion and traffic in the area. The more intense the pace of reconstruction in Lower Manhattan, the sooner the area will be able to sleep in without noisy distractions.

UPDATE:
The NYT reports that the revised memorial design has been unveiled. It was redesigned in order to contain the costs on the project.

Technorati: World Trade Center, WTC, Pataki, LMDC, urban policy, Freedom Tower, IFC, International Freedom Center, spitzer, silverstein.