GSA’s 1WTC Lease Still in Limbo

1 World Trade Center under construction (on left) (photo: Pwojdacz | Wikimedia Commons)

While the GSA reportedly is close to finalizing a long-awaited lease at the iconic One World Trade Center (1WTC), the deal remains unsigned, despite the owners’ desire to have had the lease executed by July 4. Although both the Senate and the Port Authority of New York and New Jersey (PA) have approved the agreement, the House Committee on Transportation and Infrastructure, chaired by Rep. John Mica (R-Fla.) has not yet taken action. Sen. Chuck Schumer (D-N.Y.), who has long championed the deal, said in a statement to the New York Post on July 2: “The GSA lease needs a final push to get over the finish line. The Senate committee has signed off and we’ve reached out to Congressman Mica to explain the special nature of this lease for New York and the country as a whole.” It has been widely reported that Mica is stalling the deal—as well as other federal leases—as part of his battle with the GSA over his plan to transfer the Federal Trade Commission’s Washington, D.C., headquarters building to the National Gallery of Art. But a Mica representative responded on July 5: “Chairman Mica and the committee have not held up this GSA lease and Sen. Schumer is aware of that.” Mica instead blamed the GSA for waiting too long to inform the committee of the lease details.

The deal has been in the works for more than five years. In 2007, the GSA and the PA announced a prospective agreement for 600,000 square feet. At the time, the structure was known as the Freedom Tower, and government officials were eager to help get the long-stalled project off the ground. Although the basic terms of the lease finally were agreed to in a term sheet last August, the leasing process stalled as the GSA was shaken by the conference spending scandal this past spring. On April 18, Schumer called GSA Acting Administrator Dan Tangherlini to urge him to finalize the agency’s lease agreement for 1WTC. On June 14—just in time for President Obama’s visit to Ground Zero that day—GSA signed off on a lease prospectus for 270,000 square feet with the Durst Organization, which is managing 1 WTC for its partner, the PA. That announcement—which meant that just over 50 percent of WTC’s 3 million square feet had been committed—was considered an important milestone for attracting additional tenants to the tower.

The GSA’s prospective footprint shrank by more than half after the PA and Durst—having struck a 1 million square-foot lease deal with Condé Nast—decided they’d rather keep more space available for private sector tenants. The agency will pay an average $66.33 per square foot in rent over the first five years of its 20-year lease, but a variety of concessions will make its actual payments considerably less. (The original, highly subsidized terms called for the GSA to pay a net-effective rent in the low $40s per square foot, compared with Condé Nast’s $60s a foot starting rent.)

The tower is scheduled to open in early 2015; the GSA is expected to move in after October 1 of that year.

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