World Trade Center Rebuilding Lags

Seven years after the terrorist attacks of 9/11 obliterated more than 13 million sq. ft. of prime Manhattan office space, ambitious plans for rebuilding the site remain largely unrealized.

A gaping hole sprawls in the ground as the ultramodern 7 World Trade Center looms over it. On a recent hot summer day, construction workers slowly labored at the site.

The $15 billion rebuilding project, incorporating five new skyscrapers including the Freedom Tower, along with a September 11 memorial and museum, a transportation hub, retail complex, and performing arts center, remains in the early construction stage. The aim of rebuilding 10 million sq. ft. of office space and 500 million sq. ft. of retail space remains a distant vision.

In contrast, the 52-story 7 World Trade Center was rebuilt relatively quickly, and New York developer Larry Silverstein says the absence of government red tape helped in the quick redevelopment of the third tower to collapse after the attacks. The project started in May 2002 and the building opened four years later, in May 2006. “We were able to get it done because it was not subject to any government involvement.”

But Silverstein, president and CEO of Silverstein Properties, which is also building Towers 2, 3, and 4 at an estimated cost of $7 billion, says that the delay at the larger site may have been inevitable. “Part of this was the necessary public and design process that marked the early years of the redevelopment. Part of it was also the many, many government agencies — 19 in total — involved in the project.”

Silverstein's 1.7 million sq. ft. 7 World Trade Center building, which cost $700 million and was financed with insurance proceeds and Liberty Bonds, is nearly all leased. HSBC is negotiating to rent up to seven upper floors, a Silverstein spokesman confirms. That would leave only three available floors. Asking rent is $70 to $90 per sq. ft.

Meanwhile, Christopher Ward, executive director of the Port Authority of New York and New Jersey said in a July update that the larger rebuilding project has fallen further behind. “The dates and costs of the World Trade Center projects that the public has been told are not realistic. We are not going to make any of them.” Cost overruns also are expected.

The Port Authority's current capital plan for 2007-2016 calls for an investment of more than $8 billion for its share of rebuilding. The agency expects to announce a new cost estimate and timeline in late September.

The current timetable calls for completion of The Freedom Tower and Towers 2, 3 and 4 in 2012. Tower 5, the former Deutsche Bank Building, will be redeveloped by JPMorgan Chase after its demolition in 2009.

In a fresh setback after the new delays were revealed, Merrill Lynch ended talks to lease 2.5 million sq. ft. of space at Tower 3. A spokeswoman says the financial services company's current downtown lease expires in 2013 and it is reviewing its options.

At least two of 15 issues that delayed the project have been resolved. Transportation hub designer Santiago Calatrava altered his design to fit the overall site plan. A Port Authority agreement with St. Nicholas Greek Orthodox Church paved the way to proceed on a vehicle security center.

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