NEW YORK CITY-Developer Larry Silverstein is working to secure better financing from government agencies to restart work at 3 World Trade Center, reports the Wall Street Journal.
Last month, Silverstein signed his first lease for the $2.3 billion office tower with Group M, a division of advertising giant WPP, but construction of the building is stalled at eight stories. Executives with Silverstein's firm, Silverstein Properties, have told government officials they believe they need to restructure a four-year-old municipal-financing package to resume construction upward, the Journal reports.
But the developer could hit a snag as the municipal bond market in 2013 posted its worst year since 1994, with a loss of 2.55% for the Barclays Municipal Bond Index. Prices have rebounded some this month but it remains to be seen where they'll go this year.
“There's demand but it's tempered demand right now for munis," says Robert DiMella, co-head of MacKay Municipal Managers. "They are not going to be able to come with just any structure and think the market will absorb it," he says of the possible 3 World Trade financing.
Still, Silverstein executives are in discussions with the state, city and Port Authority of New York and New Jersey to remake the deal that the developer struck with the government agencies in 2010. More specifically, the 82-year-old Silverstein now is discussing raising more private money in exchange for changes to the government debt guarantee, sources say.
"There are a number of potential modifications to the 2010 agreement that could both enhance the public sector position and benefit the overall project," says Scott Rechler, the Port Authority's vice chairman. "It is only prudent for us to consider those alternatives."
The World Trade Center also is stymied by the sluggish Manhattan office market. Manhattan rents rose 6.5% last year to $63.40 per square foot, which is still 13.1% below the 2008 peak, according to Cushman & Wakefield. Construction of 3 World Trade would add another 2 million square feet of unleased space to a site that already has more than 2 million square feet of vacant space.
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Rayna Katz
Rayna Katz is a seasoned business journalist whose extensive experience includes coverage of the lodging sector, travel and the culinary space. She was most recently content director for a business-to-business publisher, overseeing four publications. While at Meeting News, a travel trade publication, she received a Best Reporting award for a story on meeting cancellations in New Orleans during Hurricane Katrina.
