The Real Deal New York

3 WTC could be capped at seven stories

January 23, 2012 08:30AM

Three World Trade Center is close to being topped off — 73 stories shorter than initially planned. Crain’s reported that if developer Larry Silverstein, president of Silverstein Properties, cannot find an office tenant for the planned 80-story tower by the end of the year, he’ll cap it off at seven stories and seek retail tenants to fill the structure.

After talks with UBS broke off Silverstein has not come close to finding a tenant, Crain’s said, but if one is found in time, Silverstein will resume construction as planned on 3 WTC with slight delays to the expected 2015 completion date. If not, the building isn’t necessarily destined to become a seven-story stump; the cap can be removed and construction can push forward if the developer changes his mind.

The secondary plan is under consideration because without at least 400,000 square feet pre-leased and $300 million of financing secured, the Port Authority of New York & New Jersey will not guarantee the debt of the tower, under an agreement it reached with Silverstein in 2010.

Because it is already out of the ground and other World Trade Center structures are rising around it, 3 WTC might have an advantage finding a tenant over Related Companies’ Hudson Yards and Brookfield Office Properties’ Manhattan West complexes. However, that advantage is merely relative in a poor office leasing climate.

“The willingness of large-scale tenants to commit in this environment is limited because companies don’t want to go out and spend a lot of money,” said Cassidy Turley New York Tri-state President Peter Hennessy. “It’s not the building; it’s the market.” [Crain’s]