By Konrad Putzier
The Durst Organization’s leasing broker is trying hard to spin One World Trade Center as a success, as reports emerged that the office tower could open sooner than previously expected.
Capital New York reported last Friday that the Port Authority of New York and New Jersey and the Durst Organization, who are jointly developing the tower, are targeting October 27 as an opening date. The news site based its story on “people familiar with the matter”. When asked for comment by Real Estate Weekly, a spokesperson for Durst said no opening date has been selected yet.
Meanwhile, The Durst Organization’s leasing broker at 1WTC, Cushman & Wakefield, released a report defending the pace of pre-leasing at One World Trade Center, which has widely been considered lackluster. The report claimed the volume of pre-leasing at the tower is “nearly double that of its closest competitor”. Since 2006, comparable speculative office towers in Manhattan were 36.8-percent pre-leased on average at the time of opening, while One World Trade Center has already filled 57.8 percent of its office space.
Of the seven speculative towers included in the report, only 505 Fifth Avenue had a higher occupancy rate (65.7 percent) than 1WTC when it opened.
“The data show that developers who undertake speculative Manhattan office towers over build-to-suit projects, have a natural expectation that a significant percentage of leasing may occur after the building opens,” said Tara Stacom, executive vice chairman of Cushman & Wakefield.
“One World Trade Center is one of the few modern Manhattan spec buildings to have approached 60 percent leasing prior to opening, a testament to the power of its design, construction, and globally recognized address.
“While we see that industry-leading developers often take a strategic and long-term approach when it comes to lease-up timetables for spec office towers, One World Trade Center has exceeded the norm.”
While the report certainly gets the point across that 1WTC is more successful than it typically gets credit for, there are questions over the report’s methodology. For example, it doesn’t account for rent discounts or control for different stages in the cycle.
The two emptiest towers on the list, 510 Madison and 11 Times Square, opened in 2009 and 2010 during the recession, when office leasing was at a cyclical low.
The third-emptiest tower, 7 World Trade Center, opened in 2006, when the downtown market still hadn’t fully recovered from 9/11.
Take these three towers out of the equation and pre-leasing at 1WTC is just about average.
When asked whether it is fair to compare leasing at towers that opened at different points in the cycle, a Cushman & Wakefield spokesperson said, “covering a period that essentially extends across 12 years presents a good, long-term overview of spec building occupancy on opening day.”
Note: The print version of this article incorrectly stated that the Durst Organization released the report defending the pace of pre-leasing at One World Trade Center. It also incorrectly attributed the comment of a Cushman & Wakefield spokesperson to the Durst Organization.