By Samantha Sharf | Forbes
This month, nearly 17 years after the 9/11 attacks and 10-years after breaking ground, Silverstein Properties opened the fourth of five office towers planned for the World Trade Center site. So far consulting firm McKinsey, stock exchange IEX and digital advertising giant Group M—the anchor tenant with 700,000 square feet—have claimed approximately 40% of the building. At 80 stories and 2.5 million square feet, 3 World Trade Center will eventually house up to 14,000 workers.
“This is a moment of enormous pride for me and for everyone in the Silverstein organization,” said developer Larry Silverstein at the ribbon cutting. “We sought to create modern, environmentally-conscious and technologically-advanced offices. Places that foster creativity where young people would want to work and collaborate.”
The opening of the 1,079 square-foot tower signifies the nearing competition of a hallowed site and of a journey that began more than three decades ago for Silverstein, the 87 year old responsible for most of the World Trade campus. When workers move in next month, they will also be part of a massive sea change in how New Yorkers build and use office space.
Silverstein’s association with the World Trade Center began in 1980s when he convinced the Port Authority and Con Edison to let him build a 2 million square-foot office tower above an electrical substation. He eventually leased half of the resulting 7 WTC to Solomon Brothers. Later, he infamously won the 99 year ground lease for the Twin Towers just six weeks before the terrorist attacks. In the years since, he has become a controversial, but preternaturally optimistic figure in the rebuilding efforts.
On a recent afternoon, in his 7 WTC office overlooking the neighborhood he’s helping bring back, Silverstein told me: “We had to go forward. We had to rebuild. The Trade Center had become the locomotive of business activity in Lower Manhattan and the business activity in Lower Manhattan was the dynamic that sparked the economy of the city of New York.”
The world, however, has changed faster than Silverstein and his many partners have been able to construct and lease up buildings. Solomon Brothers is no more. New York’s office workers are increasingly living downtown or in Brooklyn and Jersey City. And workers in general are spending less and less time at their desks.
Designed in 2003, 3 WTC was originally conceived with five wide-open trading floors at the base, grounded on the assumption that a financial firm would occupy most of the building. Instead Group M, responsible for a third of ads sold globally, took the trading space and several office floors above them. “As it turns out, many of the same features that are conducive to a trading floor are conducive to the kinds of environments companies are trying to make in general,” observed Jeremy Moss, director of leasing for Silverstein. “They are collaborative. They are flexible.”
GroupM’s current home, located in Midtown, was built in 1920. And like much of New York’s office space, it simply cannot meet the demands of a growing, tech reliant workforce. On average, Manhattans's existing stock is 84.1 years old and just 29% of it is classified as Class A, says Lori Albert, director of research at Cushman & Wakefield. Experts say other major world cities offer a far higher percentage of best in class office space respectively.
Out of tragedy Silverstein gained a chance to give the city more of what it needs. The new World Trade Center office towers provide less space per worker than their predecessors but more access to amenities like 3 WTC’s 5,000 foot terrace opening in September. The buildings are wired for modern internet and device needs. Column-free designs allow companies to build out spaces for small huddles as well as for large but informal gatherings. Taking a cue from popular co-working spaces, a stairwell connecting two of Group M's floors double as bleachers where people can eat lunch or watch a presentation. New, says Tim Cecere, head of human resources at GroupM, also means not paying “an inheritance tax on what last tenant did.”
Silverstein, of course, is not the only developer seizing on the demand. Around the country, developers have realized focusing on worker experience will bring higher rents and keep tenants in place for longer.
In the first quarter of this year, 13.4 million square feet of office space were under construction in Manhattan, according to Cushman & Wakefield. Three miles north of 3 WTC, Steven Ross’s Hudson Yards is rising above the west side rail yards. As part of the $25 billion development Related is building retail, residential and hotel, but its main draw will be 8.6 million square feet of office spread across four towers, the first of which opened in 2016. Just above all that, Bruce Flatt’s Brookfield is adding another 6 million as a part of its Manhattan West.
Class A asking rents average $65.75 per square foot at World Trade to $76.14 on the far West Side where Hudson Yards and Manhattan West are located. Asking prices in trendy Greenwich Village reached $115 in the first quarter.
Are developers overdoing it? Not according to Moss: “Like our airports and our highways and our bridges, I think a lot of people view office buildings as part of our infrastructure. This is the space that we need to provide to companies that grow and sustain our economy and create jobs.”