Tenants leverage WTC vacancies for cheaper rents

The World Trade Center is quickly becoming office landlords’ worst enemy. Reuters reported that many office tenants are using the vast swaths of vacancies in the rising towers as a negotiating ploy to score lower rents in Midtown.

As one anonymous broker told Reuters: “We have been hired by tenants and they’ve said to us, ‘We do not want to go downtown. If we need to consider downtown to help the negotiation process for Midtown, we will do that. But it is not a viable solution for us.”

SL Green Realty CEO Marc Holliday confirmed that he had faced that very scenario during negotiations.

Asking rents in the World Trade Center complex range from $75 to $80 per foot, but often are negotiated down significantly and come with tax breaks and lower utility costs. On the other hand, asking rents in new Midtown buildings range from $70 to more than $120 per foot and are less negotiable, Reuters said. But many firms are reluctant to make the move because Midtown is closer to their clients and easier to access for workers coming from outside the city.

Meanwhile, Reuters noted that because of the complex’s difficulty in attracting tenants, 2 and 3 World Trade Centers have been slow to rise. [Reuters] — Adam Fusfeld