NEW YORK — As the grim search and rescue operation continues amid the ruins of what was The World Trade Center (WTC), local commercial real estate professionals are fully aware that displaced tenants will face myriad questions.
Ray Cirz, CEO of Integra Realty Resources, an appraisal and consulting firm headquartered in Midtown, anticipates that his company will be busy working with clients who suddenly and unexpectedly find themselves with space needs in the wake of Tuesday’s terrorist attack on the WTC. "Tenants will be asking, ‘Do we relocate? Where do we find space? Should we temporarily or permanently take space somewhere else? And what will my costs be?’" said Cirz the day after the famed 110-story towers were reduced to rubble and ash.
"We may also be working with a lot of landlords who may be asking, ‘What do we do? Do we repair the space? Do we demolish what’s there? If we demolish it, what’s the land worth?’ There are a number of issues that come up," Cirz added.
Homework and suitable alternatives
The sublease space that flooded the greater New York market earlier this year on the heels of the dot-com fallout actually may prove to be a silver lining amid the clouds of smoke covering lower Manhattan. Cirz identifies the boroughs and the suburbs as possible alternatives to this immediate demand for office space.
For example, in northern New Jersey, both Lucent Technologies and AT&T have dumped a lot of space on the market as their businesses struggle with layoffs and a generally weak corporate environment. "There are a number of large facilities that are available right now for sublease, and they can immediately satisfy some of the demand that’s going to be generated from the tenants that have been displaced from the World Trade Center," said Cirz.
An outsider’s perspective
Joseph Pasquarella, a managing director in the Philadelphia office of Integra Realty Resources, said in the short run the key for the leasing community in New York City is to conduct plenty of field research and market reconnaissance to determine what’s available and what the rental rates are likely to be.
Pasquarella’s comments are based on experience. He recalls that in 1991 a fire broke out at One Meridian Plaza, a high-rise office building in Philadelphia, claiming the lives of three firefighters and destroying 800,000 sq. ft. of office space. All of a sudden, tenants were scrambling to find space to house their operations. Some of them left for the suburbs and never returned to the city, according to Pasquarella.
"In Philadelphia, we saw a marked increase in rental rates because available space that was priced, for example, at $20 per sq. ft. full-service all of a sudden went to $25 per sq. ft. overnight to accommodate the demand," Pasquarella said.
One of a kind
With 10 million sq. ft. of office space, 425,000 sq. ft. of retail space and a population of 50,000 workers, the WTC was like a separate city, explained Cirz, who grew up across the river in Hudson County, N.J., and has appraised the complex several times. "I mean 10 million sq. ft. …there are cities in the country that don’t even have that much office space," Cirz said. He cited Integra’s own research that lists Richmond, Va., with an inventory of 8 million sq. ft. of office space.
Now that there is an unexpected void in the Manhattan skyline, the real estate community and New Yorkers alike wonder what will replace the massive twin towers. Cirz doubts developers will ever again construct buildings that approach the mammoth size of the towers.
"I don’t think you will ever see another development of this magnitude. I don’t think it would make economic sense to rebuild," Cirz said of the WTC.
"It hurt to even go look yesterday," continued Cirz, his voice tailing off. "I’ve had such a long history with the property. I’ve been through the building many, many times. It was just majestic. There was always an awe for the building," concluded Cirz. "I think New Yorkers had a lot of pride in the complex."
A landmark’s history
A wide range of international financial, legal, technology, and manufacturing firms, with a total of nearly 50,000 employees, occupied the two 110-story towers. The destruction of the landmark properties came just months after the WTC complex passed into private control for the first time in its 30-year history.
In the $3.2 billion, one of commercial real estate’s biggest ever, New York developer Silverstein Properties Inc. and Los Angeles-based REIT Westfield America Inc. signed a 99-year lease of the 16-acre site from the Port Authority of New York and New Jersey. The transaction included the two towers as well as the 9-story Four and Five World Trade Center buildings.
The World Trade Center Hotel and the US Customs House, also WTC properties, were already leased at the time of the Silverstein deal. Seven World Trade Center, also demolished during the attack, was Silverstein’s first deal with the Port Authority. Silverstein owned the 2 million sq. ft. structure that was built on land owned by the Port Authority.
Originally conceived during the 1960s as part of an urban renewal project, the twin towers were completed in the mid-1970’s, each with roughly 4 million sq. ft. of space. When they were built, Tower One and Tower Two, standing at 1,368 feet and 1,362 feet respectively, were the tallest buildings in the world. Until Tuesday, they were tallest in New York.
Skyscraperexperts say the collapse of the towers, built by architects Minoru Yamasaki & Associates, Emery Roth & Sons and structural engineer Leslie E. Robertson Associates, most likely was due to the intense fire caused by thousands of gallons of jet fuel aboard the two jetliners that crashed into the buildings. The blaze was estimated to have reached nearly 2,000 degrees Fahrenheit, which probably weakened the buildings’ vertical steel supports, allowing the walls to bend and the floors to fall straight down in a domino effect.