Categories Narrative

Reaching For Yield: The High Risk of Investments

One of the most intellectual groups I belong to is the Counselors of Real Estate. It is an invitation-only group of 1,000 people all over the world. They vet each candidate extensively. Now that I write that, I’m wondering how I got invited to join.

Anyway, at the annual convention, they had one of the most interesting sessions I have seen. Below is a summary of each panelist and some of my highlights. Here are my takeaways:

–Seek to manage and mitigate risk, not eliminate risk.
–Avoid the tyranny of the averages
–Be local. Do not just fly in and out.
–Hire local if possible – they know the market.
–And my favorite comes from Roy Schneidermann of Bard Consulting talking about venture capital. Here is the breakdown of VC money returns:
30% of investments–No return at all
20%–Capital is returned, but no profit
20%–Return is two times invested capital
20%–Return is five times invested capital
10%–Return is 10-300 times invested capital Thus, the biggest risk in the VC industry is “missing the one big one.”


Reaching for Yield_The Counselor Article

Categories Narrative

Highlights From an Interview with the Legend, Sam Zell

Sam Zell is one of the true giants in the commercial real estate industry. He is a genius and has crossed every product type and market across the United States. I have highlighted some of his comments below from his interview at the Urban Land Institute Fall meeting. Here are a few “gems” I found to be great. There are more below. After 30 years of grinding, it is nice to see the characteristic Zell looks for in new members of his leadership team: People who are smart, but not brilliant, and who are driven. They are the ones that make a difference. I would like to think that has been my career.

–“I pound on my people: Taking risk is great.”
–“The risk/return ratio is probably the most significant determinant of success as an investor.”
–It’s OK to pursue a transaction that keeps you up at night but nets a profit, and it’s OK to pursue a transaction that has less benefit but presents fewer concerns. “The only thing you don’t want to do is enter into a transaction where you can’t sleep and you can’t eat.”
–A man after my own heart–Zell reads constantly which allows him to chart direction and come up with ideas.
–“My focus has always been on understanding and defining the downside. If you understand and define the downside, then effectively you have assessed the risk.”
–On the characteristics he looks for in new members of his leadership team: “People who are smart but not brilliant and who are driven (“hungry”) are the ones that make the difference. Try to find the best possible people you can and give them rope, and they will either make a lasso or hang themselves. Constantly look for challenges and test their ability to respond.”

Thank you for reading.



Sam Zell on Risk, Margin, and Mentors

Urban Land

By: Elizabeth Razzi

November 7, 2013

Sam Zell_1

  • Entrepreneurial streak dates back to childhood.
  • Understanding the risk/reward ratio is of paramount importance.
  • The Fed’s easy money policy risks inflation.

Defining risk—understanding and defining the downside of any investment—is the key to succeeding as a real estate entrepreneur, Sam Zell, founder of Equity Group Investments and chairman of Equity International, told attendees at the 2013 ULI Fall Meeting in Chicago.

“I pound on my people: taking risk is great. You’ve got to be paid to take the risk. The risk/return ratio is probably the most significant determinant of success as an investor,” Zell said.

The native Chicagoan was interviewed at a general session of the ULI meeting by Randall K. Rowe, a former Zell employee who is now chairman of Green Courte Partners, a private equity firm based in Chicago. Rowe invited Zell to explain how his personal history, as a child of immigrants who fled Poland in 1939, shaped his career.

“He believed that the streets were paved with gold and that America created the ultimate opportunity,” Zell said of his father, who was unable to convince his extended family to leave Poland, where they were lost to the Holocaust.

“I’m a big advocate of immigration,” Zell said, “not necessarily based on familial relationships. There are people all over the world who would excel in this environment,” and who should be encouraged to come here.

Zell recalled how, when he was not yet ten years old, he knew that he was “different,” and just could not go along in the same direction as everyone around him.

“I realized, if I could, quote, make money, then I got freedom because I didn’t need to ask anyone else for money,” Zell said.

His first foray into entrepreneurship started in 1953, when he was a 12-year-old living in the Chicago suburbs. He had to take the L train into the city to attend Hebrew school, and in his solo travels to school, he discovered that newsstands in the city carried a different class of publications—specifically Playboy magazine—than he could find in the suburbs. “Needless to say, I thought it was a terrific magazine,” Zell said. His suburban friends thought it pretty terrific, too, and were willing to pay him $3 for the magazines he picked up in the city for 50 cents. “That’s when I learned about margin,” Zell joked. “For the rest of that year, I became an importer—of Playboy magazines to the suburbs.”

Zell’s entrepreneurship continued through his college years at the University of Michigan and its law school, both in Ann Arbor, where he and a fraternity brother, Robert H. Lurie, invested in housing for students. Zell said he made $150,000 in 1966, his senior year of law school. “I could have stayed in Ann Arbor,” Zell said. But he felt he had to go to Chicago or another major market where he could test himself. Lurie joined him a couple of years later, when the two founded Equity Group Investments. “It was the most significant business relationship and personal relationship of my life,” Zell said of Lurie, who died in 1990.

Zell named Chicago entrepreneur Jay Pritzker as another significant mentor. “I think he was the smartest guy, business-wise, I’ve ever seen,” Zell said. “The way he looked at risk . . . he was one of the greatest investors of all time.” Zell said dealing with Pritzker for 20 years was of extraordinary benefit to him.

Today, however, Zell is highly critical of the inflationary risk he attributes to the Federal Reserve’s quantitative easing program. It even has led him to begin investing in gold—something Zell said he never found attractive because it generates no income.

“I don’t necessarily think real estate is the great beneficiary of inflation, unless you look at it on a very long-term basis,” Zell said.

ULI Special Report: Advice from Sam Zell

Commercial Property Executive

By: Suzann D. Silverman, Editorial Director
November 11, 2013

Sam Zell_2

The legendary Sam Zell has spoken at many conferences over the years, but his keynote to a packed ballroom at the Urban Land Institute Fall Meeting on Thursday took a different tack. Interviewed by Green Courte Partners L.L.C. chairman, longtime investor and one-time Zell company executive Randall Rowe, the founder of Equity Group Investments and chairman of Equity International offered insights and advice learned from his parents and gained over a half-century career.

Sam Zell_3
Randy Rowe interviewing Sam Zell at ULI

Among those insights:

Advice from his father:

  • It’s OK to pursue a transaction that keeps you up at night but nets a profit, and it’s OK to pursue a transaction that has less benefit but presents fewer concerns. “The only thing you don’t want to do is enter into a transaction where you can’t sleep and you can’t eat.”
On developing a strategy:
  • There is no secret formula to the amount of reading you do. He reads constantly, which allows him to develop directions and ideas. “You’ve gotta be prepared.” Nobody can predict for you what the next opportunity is, but the more broadly you educate yourself, the better you’ll be able to recognize those opportunities when they come up.

On taking risk:

  • “I never knew what I couldn’t do,” so it never stopped him from trying new things.
  • “Taking risk is great, (but) you’ve got to be paid to take risk.”
  • “The risk/reward ratio is the determinant of success.”
  • Some people are not acclimated to take risk. They may be smart and have great judgment, but they don’t have the ability to accept the negative result.
  • “My focus has always been on understanding and defining the downside. If you understand and define the downside, then effectively you have assessed the risk.”

On the characteristics he looks for in new members of his leadership team:

  • People who are smart but not brilliant and who are driven (“hungry”) are the ones that make the difference. Try to find the best possible people you can and give them rope, and they will either make a lasso or hang themselves. Constantly look for challenges and test their ability to respond.
On retirement and giving back:
  • “I love what I do. I’m challenged by what I do. I get to the office at 6:30. I’m 72 years old. I hope I can do this for the rest of my life.”
  • “Anyone can put their name on a building. My focus has been on trying to make a difference.”
Categories Narrative, Office Market

Market Insight: Phoenix Office Report Q1 2014

Want to know the latest trends in the Phoenix Office market? Here’s what’s going on: Our first quarter Office Market Report was just released this week with some interesting stats. We had an excellent quarter for net absorption, the most important measure of the market’s health. We absorbed 727,000 SF, and if we keep that pace up, 2014 absorption will more than double 2013’s figure of 1.3 million SF. Landlords need this pace desperately to break the 20% vacancy threshold. Once below 20%, the market will begin to see increases in rental rates across the market.

Below is the link to our first quarter report and my three takeaways below:

1. There is almost 2 million SF of new office product under construction. Only 18% of it is speculative, the rest are build-to-suits.

2. All of the new construction is in Chandler or Tempe, except for SkySong in Scottsdale, which Craig and I lease. The Southeast Valley continues its early domination for tenants in this cycle.

3. Vacancy is still 22%; continuing to cause downward pressure on rents in general. If we absorb approximately 2 million SF or more in 2014, we will break into 19% vacancy range and begin to see a different Phoenix office market.

We have some wind at our backs here in Phoenix; let’s see how strong it stays in 2014.



For the entire report, click here.

Q1 2014 Phoenix Office Market Report_Page_1

Categories Design, Narrative

NAIOP’s ‘Office of the Future’ Competition

Last year NAIOP held another office of the future competition. Below are the four finalists and their concepts. Here is a summary:

–Hickok Cole out of Washington DC suggested a building with a second “skin” that could help filter sunlight and change as heat and light change.

–Miller Hull from Seattle talked about adaptability where contemplation and collaboration are designed into the building. If you recall, in 2013 I sent one of my narratives on the world’s most sustainable structure: the Bullitt Center. Miller Hull was the architect.

–Gensler presented “hackable buildings” where redesign of existing buildings would make them reusable and completely unrecognizable. Even their own LA headquarters had sections of the second floor jettisoned to create an open mezzanine level. I send a portion of Genlser’s annual Meta Trends a while back in an email.

–Pickard Chilton from New Haven, Connecticut presented a concept to precast materials that will cut project construction times by months. This would include premade floor modules that would allow mechanical, electrical and lighting systems to be integrated quicker and easier.

If you want to see the actual presentations given, here is the link: Scroll down for each presentation. Otherwise, below is a summary article and some renderings.


P.S. Andrew was quoted in the March/April issue of Commercial Investment Real Estate, the magazine of the Certified Commercial Investment Member Institute. Read his comments about corporate real estate trends here.


‘Office of the Future’ Competition Finalists Present Concepts
Finance and Commerce

By: Frank Jossi
May 17, 2013

New office buildings will consist of shape-changing materials that allow them to produce as much energy as they consume. They likely will be made of precast materials, saving on time and costs, and have floor plates with fewer square feet devoted to workers because many of them will spend less time there.

Older structures will be retrofitted into more attractive spaces with corners transformed into atriums, retail at street level, and offices where walls and floors have been reworked into more creative spaces.

These are just some of the ideas offered Tuesday at the “Office of the Future” presentation sponsored by the NAIOP Commercial Real Estate Development Association and several other real estate-related organizations. The event, held at the Hopkins Center for the Arts in Hopkins, drew more than 350 people to hear the four finalists in NAIOP’s Office of the Future competition. (Minneapolis-based RSP Architects received an honorable mention.)

Minneapolis-based Ryan Cos. US vice president of development Rick Collins, a judge in the national NAIOP contest, invited the finalists to the Twin Cities for another round of presentations. Collins has been in the news this week in announcing Ryan’s $400 million redevelopment plan that will include two 20-story office towers near the Vikings stadium in downtown Minneapolis.

Though architects represented four different firms on the East and West coasts, they generally agreed that future offices will have speak to a millennial generation of “digital natives” who want access to green space, public transit and to work in open, casual environments in sustainable buildings.

One structural approach that arose in the presentations was the idea of a second skin on new buildings that could help filter sunlight.

Office of the Future 1
A second skin on new buildings could help filter sunlight, according to Michael Hickok, founder and principal of Washington, D.C.-based Hickok Cole, who offered the concept of “a skin more like a plant that would change shape as heat and light change.” Hickok Cole is a finalist in NAIOP’s Office of the Future competition. (Submitted image: Hickok Cole)

Michael Hickok, founder and principal of Washington, D.C.-based Hickok Cole, offered the concept of “a skin more like a plant that would change shape as heat and light change,” he said.

The second skin would contract as the intensity of the sun’s heat increased and open them as natural light dims. Floors will be free of columns and elevators and staircases will be “pushed” to the exterior sides of buildings rather than the more common placement in the middle of a building, said Hickok, echoing an idea suggested by the panel’s other architects. A typical floor size could be 60 to 65 feet wide and 200 to 300 feet long, he said.

A building could have two electrical systems — direct and alternate currents — to allow for renewables such as wind and solar to plug directly into higher voltage systems. “Most of what we showed today could be built today,” he said.

The Miller Hull Partnership in Seattle offered the concept of more raw open space that could be customized by employees, said Craig Curtis, partner and lead designer. “The à la carte space embraces contemplation and collaboration,” he said.

The Miller Hull firm designed such a building in Seattle, the recently opened Bullitt Center that bills itself the world’s most sustainable structure. Among its many efficiency features are composting toilets, a rainwater capture and reuse system and a solar array largest enough to power the building’s electric needs, he said.

The future offices will be in neighborhoods with plenty of services and restaurants, Curtis argues, so the buildings themselves may not have to have cafeterias, fitness centers or other accoutrements.

Office of the Future 2
New Haven, Conn.-based Pickard Chilton’s concept includes precast materials, which the firm says have proved to reduce construction costs and time. Pickard Chilton is a finalist in NAIOP’s Office of the Future competition. (Submitted image: Pickard Chilton)

With architects serving as “building curators,” a new structure will likely have retail, art galleries, supermarkets and other services in addition to offices above the ground floor, he adds.

A different spin on the panel came from of Shawn Gehle, design director of Los Angeles-based Gensler, who promoted the “hacking” of older buildings to adapt them to modern workers. He pointed out that the actual need for new buildings in the United States isn’t large, which means that the challenge will be in renovating existing properties into more appealing spaces.

Buildings constructed after World War II could be revived in novel and radical ways. Taking as his example the FBI’s much loathed fortress-like headquarters in Washington, D.C., Gehle added a retail mall on the roof and topped its flat roof with a soccer field.

Corners sliced open to become atriums. Pop-out bays added visual appeal. Part of the building would become a hotel, or apartments, making for a mixed-use neighborhood, he suggested. The building is for sale, as it turns out, but Gensler’s plan was more of a creative exercise rather than a potential reality.

Even so, Gensler’s own office in Los Angeles’ Bunker Hill business district was partly “hacked,” with sections of a second floor jettisoned to create an open mezzanine level.

Office of the Future 3
Los Angeles-based Gensler suggested “hacking” the top off the FBI’s fortress-like headquarters in Washington, D.C., and putting a retail mall on the roof with a soccer field atop the mall. Gensler is one of four finalists in NAIOP’s Office of the Future competition. (Submitted image: Gensler)

Reusing older buildings makes sense. “As office space per employee drops there will be an abundance of vacancy,” he said. “Reusing buildings is the most sustainable thing you can do.”

New offices will also employ precast materials that can reduce project lengths by as much as four months, according to Brett Spearman, a designer at New Haven, Conn.-based Pickard Chilton. Premade floor modules will allow for mechanical, electrical and lighting systems to be integrated into them much more quickly and easily, he said.

By having so many prefabricated pieces available, a building owner could realize a 6.3 percent reduction in construction costs and a 20 percent reduction in construction time, he said. Data will be used to continually monitor energy use in new buildings, Spearman added, allowing owners to tweak systems for cost savings.

Office of the Future 4
The Seattle-based Miller Hull Partnership’s concept represents “a building that becomes a part of an agile, adaptable business machine, somewhere between a hands-on community and the raw edge of technology,” according to NAIOP, which named Miller Hull one of four finalists in the Office of the Future Competition. (Submitted image: Miller Hull Partnership)

Panelists agreed that many of the challenges of creating future offices come in dealing with government regulation that don’t allow for some innovations and from the way commercial real estate leases are written today.

Collins wondered if developers and builders in the future might charge a “cost per occupant” as opposed to a cost per square foot.

Hickok suggested businesses might pay more if they could see greater productivity. Better design, he said, makes “employees more efficient.”


Categories Narrative

The Construction and Leasing of One World Trade Center

Like most Americans, I followed the terrorist attack on the World Trade Center closely. Unlike most, I have continued to track the progress of the redevelopment with interest because of the office space component. Today, you get a quick update on the office space and some interesting thoughts.

First, we are now into 2014, and the tower is being completed after years of construction. During this time, the anemic recovery has lacked robust job growth AND competition has increased. There is competition on site, and a new development being created.

Here is a quick overview:
–3,000,000 SF of office
–1,350,000 SF remains to be leased
–Conde Nast is the anchor leasing over 1,000,000 SF
–Can you believe the GSA has leased space in the building? Yes, taxpayers are paying this tab. No idea why they would feel the need to take space here.
–Rates are quoted at $75/SF. Actually, not that high for NYC.
–4 Trade Center is finishing construction on site and still has 1,000,000 SF to lease
–3 Trade Center has stopped construction on site due to the initial construction loan limit of seven stories without any preleasing
–Hudson Yards is now the hot spot stealing a number of high profile tenants including SAP, L’Oreal, and Coach

Finally, with its spire reaching 1,776 feet into the air, a symbolic height in reference to the year of the United States Declaration of Independence, it has surpassed the Willis Tower (Sears Tower to most of us) and has become the tallest building in the US.

There are lots of photos below and I have highlighted some cool additional points of this construction.



One World Trade Center Unveils New Marketing Offices To Woo Tenants


By: Morgan Brennan
November 5, 2013

“It was quite an effort to get this done, but it’s come together very quickly,” says Douglas Durst, on a recent cloudy day from the 63rd floor of One World Trade Center, his eponymous real estate developer’s most high-profile project ever.

World Trade 1
Morgan Brennan
One World Trade Center has 104 floors and, including its spire, stands 1,776 feet tall. The glass-and-steel skyscraper, located within the 16-acre site once inhabited by the Twin Towers, will open in 2014.

World Trade 2
Morgan Brennan
Entrance through the World Trade Center site’s construction gate requires hard hats, goggles and steel-toe boots.

One World Trade Center, the shining glass-and-steel megalith that now defines Lower Manhattan’s skyline, juts (at least in theory) 1,776 feet into the air including its spire. Once dubbed the Freedom Tower, the signature skyscraper has been more than a decade in the making, since the tragic events of the 9/11 attacks leveled the Twin Towers in 2001.

Twelve years later, after delays and missteps have helped contribute to what is now a nearly $4 billion price tag, One World Trade Center is finally closing in on its 2014 completion.

The progress of construction has enabled the Durst Organization to carve out a marketing center on this lofty floor inside the new tower, one story below the planned Sky Lobby. The project, comprised of three million square feet of Class A office space stretched across 104 floors, is about 55% leased. Its brokers hope this new feature will help solidify deals with new tenants for the remaining 1.35 million square feet.

“This is a model floor that shows different types of uses,” says Durst, chairman of the Durst Organization, clad in spectacles, pinstripe suit and work boots fit for a construction site. “But the most dramatic way we market is the view: on a clear day it is just fantastic.”

World Trade 3
Morgan Brennan
The base of One WTC, located on Vesey Street.

World Trade 4
One World Trade Center
A rendering of the completed main entrance into One WTC.

While prospective tenants have been able to visit the massive construction site for the past several years — a tour could take as long as three hours — the fact that semi-finished floor space wasn’t available to be seen until now left a lot up to the imagination, especially in light of the $75 per square foot price tag.

World Trade 5
Morgan Brennan
The first floor lobby, still under construction, will have 55-foot tall marble-paneled walls.

World Trade 6
Morgan Brennan
Marble panels stretch across the tower’s main lobby, which will be accessible from three sides and connected to the underground transportation network.

World Trade 7
Morgan Brennan
Forbes videographer Will Sanderson videotapes the lobby.

The marketing center encompasses a full floor, decorated in office furniture and sliding glass partitions meant to reflect some of the proposed uses of One WTC’s available office space. The floor has been carved into “small vignettes that show the variety of tenant fit-outs,” according to Eric Engelhardt, the Durst Organization’s director of leasing for the building.

There’s an expansive barren space that first greets guests when they come off of the construction elevators (the passenger elevators are not yet operational), an open area defined only by walls of floor-to-ceiling windows and mounted television screens spouting marketing videos. Past this raw entry are the so-called “vignettes” demonstrating how the building’s space could be fitted for company use, from small scale tenants interested only in a few thousand square feet to larger tenants looking to rent an entire floor or more.

World Trade 8
One World Trade Center
A rendering of the finished lobby.

World Trade 9
Morgan Brennan
The construction elevators deposit visitors in an open area of the 63rd-floor marketing center, surrounded by walls of windows and mounted television screens playing marketing videos of the building.

World Trade 10
Morgan Brennan
The floor-to-ceiling windows offer views of New York Harbor, Battery Park City and the Financial District, the Hudson and East Rivers, New Jersey, and four of the five New York City boroughs.

World Trade 11
Morgan Brennan
Douglas Durst, chairman of the Durst Organization, takes in the view from the 63rd floor. His real estate development company has owned a 10% stake in One WTC since 2010.

One World Trade Center’s showroom is sleek, modern and airy but nothing can quite compare to the views Durst speaks so fondly about: miles of Metropolitan New York landscape, compassed by the Statue of Liberty-studded New York Harbor, the green domes of Battery Park City’s World Financial Center, and the bridges connecting Manhattan to Brooklyn and Queens.

Looking down, one can see the eight-acre 9/11 Memorial, a heart-tugging aerial view of the Twin Tower building footprints-turned-reflecting pools surrounded by bronze borders that host the names of every person that perished in the terrorist attacks. The silver-white roof of the 9/11 Museum peeks out from the trees that also grace the memorial park.

Putting this height into perspective, construction workers on the site below are the size of ants; taxi cabs on nearby streets resemble the micro machine toy cars once wildly popular with children.

World Trade 12
Morgan Brennan
A wall in the 63rd-floor marketing center touts economic statistics for Lower Manhattan, the square mile comprising the bottom tip of the island. The World Trade Center sits in Lower Manhattan, which has become one of New York City’s fastest-growing neighborhoods of the past decade.

World Trade 13
Morgan Brennan
The full-floor marketing center was carved out into “small vignettes that show the variety of tenant fit-outs,” according to Eric Engelhardt, the Durst Organization’s director of leasing at One WTC. Among the examples are glass-partitioned conference rooms and offices.

Leasing brokers are quick to point out that the lack of columns throughout the building’s office space allow natural light to penetrate as far into each floor as 45 feet, to the structure’s core. “It allows you to reduce circulation space,” explains Tara Stacom, a vice chairman at Cushman & Wakefield, the commercial brokerage handling leasing of One WTC. “You can take anywhere from 20% to 25% less space in this tower than in the older buildings.”

She and Durst both note that their teams are in negotiations with new tenants whose names they hope to announce before the end of this year. Much of the interest is coming from abroad, particularly international companies headquartered overseas that want to have an American outpost in a trophy building. Domestic interest is coming largely from companies outside of finance, the sector that has historically powered Lower Manhattan thanks to nearby Wall Street. Stacom says tech companies, tech services companies, law firms, and media companies have shown the most interest in the building.

World Trade 14
Morgan Brennan
Blueprint examples of office layouts grace walls in the marketing center, offering prospective tenants ideas.

World Trade 15
Morgan Brennan
Forbes videographer Tim Pierson captures the view from the 63rd floor.

World Trade 16
Morgan Brennan
From the 63rd floor once can see the nearby World Financial Center and Battery Park City, a Lower Manhattan neighborhood erected atop the landfill originally excavated from the World Trade Center site when the Twin Towers were built in the 1960s.

World Trade 17
Morgan Brennan
An aerial view from the 63rd floor of the eight-acre 9/11 Memorial and Museum. The giant squares are the Twin Tower building footprints turned memorial pools, surrounded by bronze borders hosting the names of everyone who perished in both the 1993 and 2001 terrorist attacks. Swamp white oak trees also populate the memorial site.

Of the tenants already on board, Conde Nast is the building’s so-called anchor, in a deal that has been valued at $2 billion over the next 25 years. The media giant signed on for 1.2 million square feet in 2011 in exchange for a juicy incentives package that included the Port Authority of New York and New Jersey, the site’s majority owner, assuming the last four to five years of its current lease in Midtown Manhattan. Conde Nast is expected to take over its new headquarters in January 2014 and move its workforce into the space later in the year.

Other tenants include Vantone Holdings Company Ltd., a Chinese real estate investment firm, and the U.S. General Services Administration, an arm of the federal government.

World Trade 18
One World Trade Center
The 408-foot spire was affixed to the top of the tower in spring of 2013. It is now the source of contention regarding the building’s actual height, which has been lauded as 1,776 feet in honor of America’s Declaration of Independence. In November, the Council on Tall Buildings and Urban Habitat will debate whether the spire does actually count toward the height of the building, a decision that will crown either One WTC or Chicago’s Willis Tower the Western hemisphere’s tallest building.

World Trade 19
One World Trade Center
The tower will be completed in 2014. Its anchor tenant, Conde Nast, is scheduled to take over its nearly one million square feet of space in early 2014 with the goal of fitting it out and moving its worker base in before the end of the year.

“We are well ahead of where people expected the leasing to be for One World Trade Center and we are very excited about the two new floors on 45 and 46,” insists Stacom, referring to the 94,000 square feet recently set aside and subdivided for smaller tenants.

The building is asking $75 a square foot for office space below the 64th floor Sky Lobby, though incentives are being offered to sweeten the deal. The developers are pre-building new tenants’ spaces to their specifications, free of cost. And larger tenants have access to packages that shave off as much as $8 per square foot in price. Stacom, who leases office space across Manhattan, notes that the price is relatively cheap for new construction when compared to an average price per square foot of $74 in Midtown South.

Still, One WTC faces an increasing amount of competition, some of it just next door. Silverstein Properties’ 4 World Trade Center will open later this month, comprised of 2.3 million square feet of office space inside 72 stories. An estimated 1 million square feet is still vacant. And 3 World Trade Center, which has as much as 2.8 million square feet of office space planned, stalled seven stories into construction earlier this year due to a lack of tenants.

But perhaps One WTC’s steepest competition is further north, at Hudson Yards, the mega project emerging along the last stretch of the High Line atop the Far West Side’s train tracks. That new neighborhood within a neighborhood will encompass 26 acres and 17 million square feet of mixed use space including two office towers. Prospective tenants there are being offered a choice of leasing or buying at cost. Time Warner Center, arguably the city’s largest tenant shopping for new space, is expected to sign on there, joining companies like Coach, SAP and L’Oreal.

World Trade 20
Morgan Brennan
The active 16-acre World Trade Center construction site is home to a host of buildings and structures including 4 World Trade Center, a 978-foot office tower scheduled to open on November 12, 2013.

World Trade 21
Morgan Brennan
The Transportation Hub, which currently resembles a steel skeleton, has been under construction since 2007. Designed by architect Santiago Calatrava, it will tout retractable steel-and-glass ‘wings’ that will allow natural light to penetrate the rail platforms 60 feet below ground. The hub is expected to host as many as 250,000 pedestrians per day and its large public transportation network is a selling point for office space in One WTC.

World Trade 22
One World Trade Center
A rendering the finished One World Trade Center and its surrounding structures.

The Port Authority of New York and New Jersey owns a majority stake in One World Trade Center as well as nearly all of the 16-acres of land (save 7 WTC) that the greater Trade Center site encompasses. The Durst Organization came on as a minority owner in One WTC in 2010, acquiring a 10% stake and the right to property manage the building in return for helping secure tenants.

“The Port Authority has its way of doing things,” concedes Durst. “They know what to do in terms of airports and bridges, but an office building takes special knowledge and trying to convince them that we actually do know what we are doing sometimes takes more effort than we’d like.”

Tishman Construction, the same company that erected the Twin Towers in the 1960s, has been building the tower. The lease for the entire World Trade Center complex is held by Silverstein Properties, in a 99-year deal that had been inked an unfortunate six weeks before the September 11 attacks.

Later this month, One WTC will grace headlines again when the Chicago, Ill.-based Council on Tall Buildings and Urban Habitat comes to a decision about measuring the new tower’s height. At least in theory, the building, designed by star architect David Childs of Skidmore Owings & Merrill, stands a symbolic 1,776 feet tall. But that design included an ornamental “radome” comprised of fiberglass and steel that would cover the skyscraper’s mast, a feature that has since been scrapped by the Port Authority and the Durst Organization due to its supposed $20 million price tag and projected costly upkeep.

The council’s call on measurement methodology could translate into a height allocation that shaves off as much as 400 feet, meaning Chicago’s Willis Tower could remain the country’s — and the Western Hemisphere’s — tallest tower.

“My thought is that the spire is 1,776 feet tall no matter what they say,” asserts Durst, glancing around One WTC’s 63rd floor marketing office. “Other thoughts, I can’t say here!”

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