curtails some major capital projects, the Port Authority of New York and New Jersey is reportedly seeking a partner on One World Trade Center. Published reports say the Port Authority has sounded out a half dozen key owners and developers to bid for an interest in the 105-story office tower.
The New York Times and the Associated Press said the authority hopes to raise at least $100 million by bringing in a private-sector partner, which would also be responsible for leasing the remainder of the 2.6-million-square-foot skyscraper. According to the Times, the authority has identified Boston Properties, Hines, Vornado Realty Trust, the Durst Organization, Related Cos. and Brookfield Properties as candidates for such a partnership. Last spring, Beijing Vantone Industrial Co. signed a 20-year lease for five floors and 190,000 square feet at the tower, and state and federal agencies have preliminary commitments on another one million square feet there.
A spokesman for the Port Authority declined to comment on the Times article. However, both the Times and the AP quoted another spokesman as saying "the timing is right to determine whether there is a strategic partnership that can add long-term success to the building." Additionally, Steven Spinola, president of the Real Estate Board of New York, told the AP it was a smart move for the authority "to bring in private-sector know-how and look for the opportunity to maybe generate some revenue."
In prior years, the idea of bringing partners into the project has been broached. A few months after the Port Authority assumed control of what was then known as the Freedom Tower from Silverstein Properties Inc. in September 2006, the then-governors of both New York and New Jersey expressed support for the idea of selling it. New Jersey Gov. Jon Corzine said it would be "good public policy" for the authority to concentrate on transportation rather than real estate development. And in June 2008, the New York Post reported that the authority had met with major developers about a possible partnership or long-term lease of the $3.2-billion property.
Construction of One World Trade is scheduled to be completed by 2013. In November, the Port Authority's third-quarter report on WTC progress said it had met 21 of 24 quarterly milestones on construction at Ground Zero, and had a goal of building the 1,776-foot tower to the equivalent of the 20th floor in the first quarter of 2010.
In light of what the quarterly report called "the continued uncertainty" on the schedule for the development of Towers 2, 3 and 4" at the WTC, the Port Authority has begun formulating a revised design for the WTC Hub that will allow completion of the WTC site's public components "independent of construction of Towers 2, 3 and 4." Last August, New York Gov. David Paterson ordered the authority to come up with an alternative plan as discussions on the timetable and construction financing for SPI's three Ground Zero towers reached a dead end. The disagreement between SPI and the authority is currently in arbitration, and the arbitration panel's decision is expected to be handed down in the next couple of months.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
