The Rebuilding of Ground Zero, Part 18

48 days late, but better than never, the Port Authority has handed over the East side of the Ground Zero site to Larry Silverstein so that Tower 3 and Tower 4 can begin construction.

he World Trade Center site's owner turned over land where two office towers are planned to a developer, clearing the way for construction to begin soon on more skyscrapers at ground zero.

The Port Authority of New York and New Jersey finished excavating the land for the towers on Sunday, 48 days behind a deadline it set for itself in an agreement with Larry Silverstein. The agency paid $14.4 million in late fees to the developer. It said it partially made up for the cost by not paying the contractor a $10 million bonus it would have received for finishing on time.

The Port Authority worked for more than a year to build 80-foot-deep foundations for two towers that Silverstein will build, removing nearly 400,000 tons of concrete, soil and rock. Silverstein had said that construction would begin on the towers within weeks after the land was turned over.

The Port Authority incurred nearly $15 million in late fees for missing its deadline to have the site prepped for Silverstein. That amount is offset by withholding a $10 million payment to the contractor who was preparing the foundations in the area for Silverstein.

Now that the foundation work is done, Silverstein can begin the actual rebuilding of Ground Zero along the Church/Greenwich Street corridor.

Still, there is little movement on the deconstruction of the Deutsche Bank building, which must come down for full development at Ground Zero to get underway since it is a key location for the security center for vehicles accessing the site underground.

Steve Cuozzo notes that the City needs this new office space, and space built elsewhere in the City to remain competitive globally. This, despite grumbling from some real estate experts who think that building on spec (without signed tenants) is not a good idea:

CBRE Regional CEO Mary Ann Tighe notes that 64 percent of Manhattan's towers will be more than 50 years old by 2010; nationally it's 24 percent.

That matters because companies that count most to the city's economy increasingly demand brand new buildings, not buildings 50 or even 10 years old. Only the newest locations offer the 14-foot "slab to slab" floor heights needed to install modern fiber optics, among other amenities.

Developers can improve lobbies and modernize heating and ventilation systems - but an older building is still an older building.

New York developers, landlords and brokers take comfort in a "disciplined" market where new buildings rarely go up without pre- signed tenants. It's a big reason why today's vacancy rate of around 8 percent is unlikely to mushroom out of control even in the event of large-scale Wall Street layoffs.

But that same discipline - instilled after the bear market of the early '90s pushed a few new, temporarily vacant Midtown buildings into foreclosure - is also our Achilles heel, stifling urgently needed new construction.

It's ironic that for all developers' (and banks') fears of speculative building, every spec project of the past dozen years has been a howling success.

Douglas Durst's 4 Times Square instantly lured Condé Nast and Skadden Arps. Tishman Speyer's 222 E. 41st St., and Kipp/Stawski's 505 Fifth Ave. took no time at all to fill up. Silverstein's 7 WTC is well on its way to being full.

UPDATE:
OSHA has handed down fines for the fire at the Deutsche Bank building against Bovis Lend Lease and John Galt Corp:

The 41-story building has stood beside ground zero as an ugly reminder of the Sept. 11 attack and the slow progress of rebuilding Lower Manhattan. The complex project, perhaps the most closely scrutinized undertaking of its kind, involved removing asbestos and other potentially toxic materials from the tower and tearing it down floor by floor. The deconstruction work had torn down the building to its 26th floor when the fire halted the project.

OSHA cited the two contractors for a total of $464,500 in proposed fines. They issued three willful and 22 serious citations to Galt, carrying fines of $271,500 and 2 willful and 17 serious citations to Bovis, with $193,000 in fines.

The agency defines a willful violation as one committed “with plain indifference to or intentional disregard for employee safety and health.” A serious citation, according to the agency, is one in which “death or serious physical harm is likely to result from a hazard about which the employer knew or should have known.”

The EPA has approved a new plan to deconstruct the building after decontaminating the entire building first. The plan previously used had both decontamination and deconstruction going on simultaneously on different floors.