The Battle For Ground Zero, Part 154

Silverstein is raising rents at 7 WTC. It wasn't so long ago that he was being castigated to lower rents because he was perceived as not having provided sufficient incentives to prospective tenants to rent. Well, the tight market in Midtown means that businesses looking to consolidate are turning to Lower Manhattan and Silverstein's gleaming new skyscraper.

Once again, we're seeing why real estate developers are better at predicting the real estate market than politicians - even popular ones who ran a business (here's looking at you, Bloomberg!)

At the same time, Crain's New York reports that a deal between Silverstein and a Chinese company to lease 200,000 sf is in doubt. Silverstein thinks the deal is dead, but the company is moving forward. Someone get the two sides a translator to get 'em on the same page:

[Silverstein] blamed the deal's breakdown on Vantone's failure to deliver a $45 million letter of credit by noon yesterday.

"It is unfortunately another deadline in a long series of deadlines that has come and gone without our transaction being consummated," developer Larry Silverstein wrote yesterday in a letter to Xue Ya, executive director of the China Center. "We no longer have confidence in your ability to fulfill the terms of the proposed lease transaction."

Vantone was surprised by the letter and maintains it never agreed to any deadlines. "Larry sent us letters giving a deadline, but we never negotiated any dates," says Ms. Ya. "It was totally one-sided."

The $70 million China Center deal was not finalized until June 30.

"We just finished finalizing the deal right before the July 4 holiday and our bank in China has had only a week," says Ms. Ya. "Any bank would need to time to approve a $45 million line of credit."

Vantone will deliver the letter of credit as soon as it is approved, regardless of whether it will change Mr. Silverstein's position. "We have spent three years on this deal and it represents Chinese companies going global. We are going to fulfill our commitment," says Ms. Ya.

The commercial market downtown has strengthened since the letter of intent was signed with Vantone in January. Asking rents at 7 World Trade Center have seen a 10% hike to $55 a square foot, according to an article today in the New York Post, and the vacancy downtown has dropped to 11.2%, according to Cushman & Wakefield.