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World Trade Center tower opens with large vacancies

The first new skyscraper at New York's World Trade Center is set to open on Wednesday with large vacancies more than 12 years after the September 11 terrorist attacks.

The 72-story Four World Trade Center, built by private developer Larry Silverstein and designed by Japanese architect Fumihiko Maki, is part of a ring of glassy office towers on the reconstructed 16-acre Ground Zero site.

The complex stop-start $14bn World Trade Center development has been an expensive architectural and engineering endeavour. But the site - owned by the Port Authority of New York and New Jersey and leased to Silverstein Properties for 99 years - is still a frenzied construction hub and the buildings that are ready have large vacancies.

It has been a struggle to find tenants as cost-wary corporations, stung by the global financial crisis and its fallout, have downsized or searched for cheaper office space.

So far, only two government tenants - the Port Authority and New York City's Human Resources Administration - have agreed to occupy 60 per cent of Four World Trade Center. Some of this space may be subleased, said people familiar with the matter.

Meanwhile, the signature 104-floor One World Trade Center - a joint venture between developer The Durst Organization and the Port Authority - has Conde Nast as its main tenant. Vantone Holding's China Center and the US General Services Administration, a federal government agency, will bring occupancy to just over half.

One World Trade Center will be the tallest building in the US, the Council on Tall Buildings and Urban Habitat said on Tuesday.

Rents for these two buildings stand at $75 a square foot. Although higher than average Manhattan office rates of $62, they are cheaper than new construction elsewhere, which can be in excess of $100.

Two and Three World Trade Center will not be built to their full heights until there is enough leasing in place to make them financially viable. GroupM, a subsidiary of advertising group WPP, is in talks to be the main tenant at Three World Trade Center, people familiar with the matter said.

Financial services and related companies - traditionally the high-quality tenants that spurred office property development - have been more cautious about their space requirements in recent years. CBRE, the property broker, said occupancy by these companies in the city has fallen by almost 10 per cent in the past 5 years.

While industry analysts believe the World Trade Center buildings will fill up eventually, they question how long it will take. The site is competing with Brookfield Place, the four-building office complex neighbouring the World Trade Center site. The sprawling $15bn Hudson Yards project to transform the city's desolate far west side will also have space come available in the coming years.

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Even so Adam Foster at CBRE, who is helping to lease Four World Trade Center, said significant progress had been made with the site.

"It is all coming together very quickly, particularly now that people are able to go to the site and see what it looks like. We've had a lot of foot traffic in recent weeks, particularly from technology and media tenants," he said.

Developers have been marketing properties to non-traditional tenants in fast growing sectors to fill the gaps left by financial tenants as well as offering smaller ready-for-use spaces, expansion options and design flexibility among other incentives to fill space.

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