By Roland Li
The Durst Organization has won the bid for a large stake at One World Trade Center, beating a proposal from the Related Companies and strengthening the project’s outlook.
Durst will pay at least $100 million for a partnership in the $3 billion tower, and has 30 days to finalize its terms with the Port Authority of New York and New Jersey, the tower’s developer. Durst will assist with construction and be the building manager, as well as handling leasing and tenant built-out.
The partnership is a victory for Durst after an intense six-month competition that originally involved six developers, including Vornado Realty Trust, Boston Properties, Brookfield Properties and Hines Interests, along with Durst and Related.
"We’re extremely pleased that some of the most prominent developers in the country saw market value in this world-class office tower, and engaged in an extremely competitive process for a stake in it. What is most important is that we reach an agreement that is good for the building, for the World Trade Center site and for the region," said Anthony Coscia, chairman of the Authority, in a statement.
The interest in a partnership with the Authority is a testament to developers warming up to the once-maligned tower. In 2007, Douglas Durst, owner of the Durst Organization, and Anthony Malkin, president of Malkin Holdings, took out full-page newspaper ads protesting the project, which was formerly known as the Freedom Tower.
"We believe that the Freedom Tower is the legacy of poor planning and decision-making by the Pataki administration," read an advertisement. "The Freedom Tower...is far too important an undertaking to be mired by inefficient planning, hasty design, or occupancy by government agencies paying sub-market rents."
But the downturn may have actually spurred on Durst’s interest in the project, as the company is well-financed and in a position of strength. Seizing a partnership with one of the few new developments in Manhattan could cement Durst as one of the city’s premier developers.
The Authority said that it chose Durst because its proposal was best-aligned with the long-term success of the tower, and because of Durst’s success in developing green office buildings. Its most recent project, One Bryant Park, is LEED Platinum-certified, the highest mark for the green building rating. One World Trade Center is aiming for Gold LEED certification.
Meanwhile, Related’s plan for the tower had called for more amenities, including a fitness center.
"While we are disappointed and thought we offered a great vision for this iconic destination development and lower Manhattan, we wish the Port Authority and their new partner well," said Stephen Ross, chairman of the Related Companies, in a statement.
Durst now has the challenge of finding tenants for about half of the 2,923,786 rentable square feet .n the tower. Currently, the Authority has leasing commitments for 1.3 million s/f, with the U.S. General Services Administration and the New York State Office of General Services committing to 1.1 million s/f. The only private tenant to date is the Vantone Industry Co of Beijing, which has taken 190,810 s/f.
"We’re in the due diligence phase," said Jordan Berkowitz, director of external affairs for Durst. The company is strategizing a marketing campaign for the tower and potential tenants, he added.
Durst is also the landlord of 4 Times Square, the home of Condé Nast, which expressed interest in one million square feet at One World Trade Center in May. A move downtown by Condé would be a major coup for the building and give it an impressive anchor tenant, as well as continuing the trend of media companies going downtown.
Newsweek moved to Hudson Street last year, although it plans to move back uptown, and American Media, publisher of the National Enquirer, moved to 4 New York Plaza.
Mort Zuckerman’s Daily News has also been looking downtown. (Zuckerman is also the chairman of Boston Properties, which issued a bid for One World Trade Center.)
Construction of the tower has risen to the 28th floor, with about 270 feet of the 1,776-foot tower built, according to the Authority. Completion is expected in 2013.
The Cushman & Wakefield leasing team, led by Tara Stacom and Alan Stein, that has been representing the building, will continue to work with all parties invovled int he project.
"Cushman & Wakefield is finding the market highly responsive and we are engaged in active discussions with prospects," said Stacom. " By engaging the participation of one of the industry’s leading real estate development companies, The Durst Organization, the Port Authority is making this highly desirable property even more attractive. We are committed to this project and we look forward to working with all members of the development team to ensure its success."
An earlier version of this story misstated the rentable square feet of One World Trade Center.