Developer Larry Silverstein sits at the center of the biggest commercial real estate story in New York City so far this decade. CEO and president of Silverstein Properties, Silverstein is the primary leaseholder at the World Trade Center site and the developer of the new 52-story 7 World Trade Center. He is also the developer of at least five other office towers at the site, most notably the Freedom Tower. It’s in this role that Silverstein has become one of the most buzzed-about figures in Big Apple real estate. Some say that tenants will never fill the office space that Silverstein plans for Lower Manhattan. Others say he’s neglecting the possibilities in residential development there. Still others, including Mayor Bloomberg, say he’ll never be able to finish all the towers.
In a recent podcast interview with The Real Deal, Silverstein answered his critics and talked about his vision for Lower Manhattan. The interview is part of The Real Deal’s regular podcast series.
THE REAL DEAL: How do you see the city and the state involved in the redevelopment of the World Trade Center site?
LARRY SILVERSTEIN: We, the city, the state, and the Port Authority, the LMDC [Lower Manhattan Development Corporation] signed contractual commitments setting forth exactly what we would build down there, pursuant to the master plan that had been vetted through the public process. And we all agreed at that time to build the five office buildings on the site — the 10 million square feet. We set forth the specifics as to who was responsible for what. It was clearly delineated that the city would be responsible for certain aspects of this, the Port Authority others. We’re primarily responsible for building the office buildings, once the Port Authority completes the excavation of the east bathtub and erects a slurry wall around it. And thereafter we will be obligated to proceed to build the five office buildings on that site.
So, a difference has developed because the mayor has changed his position. The Port Authority has changed its position. The governor hasn’t changed his position, nor have I changed mine.
TRD: Why do you think they changed their positions?
LS: Well, it’s hard for me to tell you precisely why they changed because I don’t know. What I can tell you is that there are three superb sites [at the World Trade Center site] — three of the five sites are really unique. Sites two, three, and four are really remarkable in the sense that their footprints are really large. Those sites carry 70,000-, 75,000-, 80,000-square-foot footprints, which are perfect — absolutely perfect — for major financial corporations that need big trading floors at the base of their buildings or major communications concerns that need large studios at the base of their buildings.
There is no place else in the city of New York that these major corporations can go to access sites with anywhere near that size footprint — just doesn’t exist anywhere. If you tried to use those footprints for residential, you’d find that they’re totally, totally in excess of what residential can be placed on it.
TRD: Do you think this would be too much office space coming onto the market over time?
LS: No, I don’t. And the reason I don’t is we lost 15 million square feet of Class A office space on September 11, and, thereafter, another 12.5 million square feet of office space in Lower Manhattan has been converted to residential usage. So, we’re now down 27.5 million square feet of office space in Lower Manhattan. All we’re going to be doing on these five sites is putting back 10 million of the 27 million square feet of office space and this over a period of 10 years. So, it’s equivalent to like a million square feet a year. This market can easily and has always absorbed well in excess of a million square feet of new construction a year. So, there’s not a doubt in my mind the need for the office space will be there, especially when you recognize that the site is serviced by 14 mass transit lines in addition to ferries and a whole mess of other public facilities.
You also have the fact that the federal government is spending $5 billion on the infrastructure down there, $2.2 billion of which is going to a PATH terminal. Why would you ever contemplate spending $2.2 billion on a PATH terminal if you didn’t envision major office capabilities and facilities down there for using it? You certainly wouldn’t need that for residential. But you certainly do need it for commercial.