Port Authority approves historic lease Wednesday under which Condé Nast will become the anchor tenant of lynchpin tower at reborn World Trade Center site.
After months of intense negotiations, the board of the Port Authority of New York & New Jersey approved a deal on Wednesday that paves the way for Condé Nast Publications to become the anchor tenant of 1 World Trade Center.
The Port, which owns the World Trade Center site, is also expected to complete its deal to sell a stake in the 1,776-foot-tall, 104-story tower to the Durst Organization for $100 million. Sources have estimated that would buy about 10% of the building, but a Durst spokesman said the stake’s value can only be determined after the 3 million-square-foot building’s worth is fully established.
Under the leasing deal, the publisher of Vogue, The New Yorker and other publications, will pay $1.9 billion over the course of a 25-year lease for 1 million square feet of space on 21 floors of the tower. The building is slated for completion in 2013. The transaction is widely seen as a boon for the downtown market, where commercial vacancy rates have remained higher than in other areas of New York since the recession. The deal is another major sign of the rebirth of the trade center site, where redevelopment plans struggled for years to get traction and the tenth anniversary of the terror attacks approaches.
“From travel to fashion to cultural critiques, the Condé Nast imprint lends authority to any subject. The same can be said with real estate,” said Port Authority Executive Director Christopher Ward. He called the company a “trend setter,” and noted that its previous move to Times Square in 1999 helped solidify that once-seedy district as a proper corporate address.
In a statement released by the Port, Condé Nast chairman S. I. Newhouse Jr. said the company has thrived in New York “in part due to the city’s indefatigable energy, power and vitality.”
“We are proud to be taking part in the revitalization of lower Manhattan,” he said.
Sources said that under the deal, Condé Nast will pay an average of $60 a square foot for the first 10 years of the 25-year lease. However, that is before receiving $5 a square foot in various tax incentives, which the publisher will receive for the first 750,000 square feet of the lease. There is also a raft of other tax incentives available to tenants at the site, including lower real estate taxes and sales-tax exemption on items bought to outfit the offices.
The Port was anxious to lure the prestigious firm to the tower. As part of the deal, the agency will agree to take responsibility for the remaining years of the lease at Condé Nast’s current headquarters at 4 Times Square.
This is the second corporate tenant for One World Trade Center. Last year, China-based Vantone Industrial Co. signed a lease for nearly 191,000 square feet. Rents will start at $80 a square foot and increase over the course of the lease, which extends for nearly 21 years.
Meanwhile, federal and state agencies have committed to leasing about 1 million square feet in the tower.
Source: AP & Crain’s New York Business