Thursday, July 08, 2010

The Rebuilding of Ground Zero, Part 105

Leave it to the New York Times to sound downcast over how the Port Authority had selected the Durst Organization to operate and market the Freedom Tower (1WTC). Let's not forget that the Times is a real estate venture as much as it is a newspaper publication, and its midtown skyscraper headquarters competes with the construction at Ground Zero. The paper had repeatedly downplayed the viability of office space at Ground Zero.
The authority’s board met Wednesday and selected Durst over the other finalist, the Related Companies, one of the city’s most prolific developers. The authority and the Dursts plan to negotiate a final agreement over the next 30 days. If the deal is completed, the Dursts will invest at least $100 million for an undisclosed stake in the project and take over leasing and management of the building.

The authority figured that it was good at building but would need an expert to lure top-notch tenants from the United States and abroad. In one of the more intriguing possibilities, the publishing giant Condé Nast has expressed interest in moving to 1 World Trade Center from a Durst building in Times Square.

“We’re extremely pleased that some of the most prominent developers in the country saw market value in this world-class office tower, and engaged in an extremely competitive process for a stake in it,” said Anthony R. Coscia, the authority’s chairman. “What is most important is that we reach an agreement that is good for the building, for the World Trade Center site and for the region.”

So far, the Beijing Vantone Industrial Company, a Chinese real estate firm that signed a lease for the 64th through 69th floors, a total of about 190,000 square feet, is the sole private tenant. The authority has preliminary agreements with the state and federal governments for one million square feet.

The authority had explored selling the building in 2007 to a private equity firm, but the recession quickly wiped out that possibility. In January, the authority solicited interest from a select group of developers who might be interested in a partnership deal. Six responded: the Durst Organization; Steven Roth, chairman of Vornado Realty Trust, a national real estate company; Mortimer B. Zuckerman, chairman of Boston Properties and the owner of The Daily News; Brookfield Properties, one of the largest landlords downtown; Hines, an international developer based in Texas; and Stephen M. Ross, chief executive of the Related Companies.
Well, the naysayers were wrong - as I'd been saying all along. There was strong competition for the right to manage the site and have a stake in the construction project. That belies the claims that the tower would be a white elephant and remain empty even with a poor real estate market.

That there was such strong competition for the rights shows the folly in forcing Larry Silverstein out of the project in the first place. He was in a position to get the tower built quicker and yet the Port Authority dragged its feet, leading to delays throughout the site.

But that's all water under the bridge now as the Freedom Tower is now about 25 stories tall.

So, who is the Durst Organization? It's one of the City's largest real estate family ventures, and among its holdings is the nearly completed environmentally friendly Bank of America tower at Bryant Park in NYC and 4 Times Square.

The Daily News further points out that Doug Durst had a turnaround of his own on the feasibility of the Freedom Tower - he had questioned the feasibility of the project just a few years ago.

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