One World Trade Center Slashes Rents Prices Due to Low Demand
Scheduled to open before the end of the year, One World Trade Center in Lower Manhattan is only 55 percent leased. Now, owners are slashing rents to try to get more tenants into the 1,776-foot tower.
Advertising firm Kids Creative was the first private tenant to sign a lease in nearly three years at One World Trade Center.
Because of the low occupancy rates, owner Douglas Durst and the Port Authority of New York and New Jersey is cutting rents by almost 10 percent to $69 per square foot for larger tenants on the building's middle floors. That's down from $75 per square foot, according to Durst.
"The market's not there," said Mr. Durst, whose Durst Organization bought a stake in the tower from the Port Authority in mid-2011. "When we started in 2011, everybody expected the economy to take off, and obviously that hasn't happened."
The tower is facing financial uncertainity. Not only did it cost $3.9 billion to build One World Trade Center (formerly named the Freedom Tower), it is unclear when, or if, the building will be fully leased.
Durst is seeing major tenants like Time Inc. and Bank of New York Mellon Corp. pass on leasing One World Trade Center and heading to Brookfield Place, the former World Financial Center or other downtown buildings because of lower rents.
Average rents for top-quality buildings downtown averaged just over $50 in the first quarter of 2014 and Durst can't compete with prices like that.
"We have a lot of people looking at the space, but because of the asking rent, we are not able to really put anything over the finish line," Mr. Durst said.
The World Trade Center twin towers struggled with finding tenants as well. The twin towers had to lease much of the office space to government agencies.
Around One World Trade Center, there is also 7 World Trade Center, which was built in 2006 and is now fully leased.
Last fall saw the opening of 4 World Trade Center, which is only 51 percent leased and the two tenants are government agencies.
Some think that tenants are fearful of leasing in One World Trade Center because of security concerns. Durst disagrees calling One World Trade Center "the safest building in the U.S."
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