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New World Trade Center tower remains nearly 40 percent empty

“We haven’t really seen any major financial institutions make a play for the trade center, the way tech and publishing have,” real estate executive Michael Cohen said.

By Doug G. Ware
1/9
New World Trade Center tower remains nearly 40 percent empty
The shiny new One World Trade Center in New York City remains more than a third unoccupied. File Photo by John Angelillo/UPI | License Photo

NEW YORK, May 28 (UPI) -- More than 13 years after the original World Trade Center was destroyed, a shiny new tower stands in its place. But six months after its grand opening, the building remains more than a third unoccupied.

The 1,776-foot tower, called One World Trade Center, is the centerpiece of the new complex -- some of which remains under development -- and its observation deck is scheduled to open to the public Friday. But the office building is seeing a vastly different tenant than those of its predecessor.

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Shortly before they were destroyed, the original towers boasted a 96 percent occupancy rate -- most of which was rented by financial and real estate firms. In the new tower, though, the vast majority of tenants are firms in technology, advertising, media and information (TAMI) -- a sector that comprised just 3 percent in the old towers.

Of the tower's 63 percent of currently rented space, almost 70 percent of that is comprised of TAMI firms.

RELATED Time lapse shows 11-year construction of One World Trade Center

"In the tech community, they want to know all their employees find the property selected as a place they would want to work," Tara Stacom, the head of leasing for One World Trade Center, said.

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Part of the reason financial firms are staying away from the new tower, some analysts believe, is the ongoing impact of the 2008 financial crisis. Consequently, renters from that sector are no longer seeking new commercial office space in Manhattan, the Financial Times reported.

"We haven't really seen any major financial institutions make a play for the trade center, the way tech and publishing have," Michael Cohen, president of the real estate company Colliers, said. "For big banks, staying put is the cheapest alternative, and [financial institutions] are all about cost control."

RELATED One World Trade Center elevator shows New York's history

Financial and banking firms occupied about half of the old World Trade Center. They were forced out after the Sept. 11, 2001, terror attacks, and many have opted not to return -- even though rent in Lower Manhattan is typically $20 to $30 less per square foot than it is in Midtown Manhattan, which contains its own high-profile office towers like the Empire State and Chrysler buildings.

RELATED 'CBS This Morning' broadcasting live from atop One World Trade Center

Further, One World Trade Center charges far more than market rate for its office space. In Lower Manhattan, the average rent is $55 per square foot. In the Trade Center, that rises to between $69 and $100 -- as tenants pay more the higher their offices are located in the tower.

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Nonetheless, rent must be higher in the "Freedom Tower" because the building cost nearly $4 billion to build -- making it one of the most expensive skyscrapers ever constructed.

That's part of the challenge faced by World Trade Center owner Larry Silverstein, who purchased the old complex a few months before it was destroyed.

Furthermore, there are several additional towers under construction at the new complex. Two World Trade Center, scheduled to be the second-tallest at the site with 88 floors, has been postponed until developers can sign tenants. Three World Trade Center, with 80 stories, is under construction at a cost of $2.5 billion. The 72-story Four World Trade Center, at $1.9 billion, opened in 2013. Five World Trade Center is also on hold, and Seven World Trade Center opened in 2006.

Nearby, the Brookfield Place office complex is operating at full capacity -- likely because rent prices there are 20 percent cheaper than at the World Trade Center.

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