The Freedom Tower

CityLimits.org says the city has moved towards a deal to relocate some city agencies to the new World Trade Center.
The deal “gives Ground Zero developer Silverstein a choice to lock the city into a 15-year lease for space in one of the new World Trade buildings.
“It’s nice to have options, and the city last week offered some details on the one it has given to Ground Zero developer Larry Silverstein—a choice to lock the city into a 15-year lease for nearly 600,000 square feet in one of the new World Trade Center towers, for a total price tag of $577 million.

The city granted the option in September 2006, as part of a deal with the Port Authority, New York state and Silverstein Properties over control of the WTC site. But ahead of a contract hearing on Wednesday about the lease, the city revealed new details on the deal’s scope, duration, escalating rent and total bill. The city would occupy 581,642 square feet – comprising all of the 7th through 21st floors of Tower 4 – and would pay rent beginning at $56.50 per square foot, rising each year for the next five years and then jumping again in the 10th year of the lease to $73.21 per square foot.

What the city didn’t reveal is which agencies will use the space, because they don’t know yet. Indeed, while the city leases some 22.5 million square feet of space around the city each year, the Tower 4 deal is unique: It applies to a building that doesn’t exist yet, provides space that has no identified need and probably wouldn’t be used until 2013.

That’s if the lease ever takes effect. Silverstein has until the end of 2009 to execute his option and make the lease binding. Leases on Class A office space in Lower Manhattan went for an average of $53 at the end of last year, but the price had increased 17 percent just over the course of 2007. Since Silverstein’s most recent leases at his rebuilt 7WTC are closing at a reported $70 a square foot, the developer might decide that the city’s deal is too cheap. “The cost per square foot that the city is paying is well below market for Class A space and especially new space downtown,” says Dara McQuillan, a spokesperson for Silverstein Properties. On the other hand against a backdrop of a softening national and local economy what the city’s deal lacks in lucre it makes up for it in certainty.”