New World Trade Center Attracts Few Financial Companies

Tire-Kickers

“We’ve certainly seen an uptick in both people kicking tires as well as incoming proposals,” he said. “The Manhattan market is significantly deeper in the small-size tenants, so that’s why, by nature of the market, we will see activity in the smaller-scale size range.”

In addition to additional smaller agreements, Engelhardt said he expects to complete one or two larger leases of 100,000 square feet or more this year. He wouldn’t name any potential tenants.

One World Trade Center is on track to meet the developers’ goal of 92.5 percent occupancy in 2019, with net operating income of $144 million, said Erica Dumas, a spokeswoman for the Port Authority of New York and New Jersey, co-owner of the tower.

At least one company has decided to scale back its commitment. Advertising firm KiDS Creative, which in May agreed to the first private commercial lease at the skyscraper in three years, last week reduced its space to about 2,400 square feet from 34,775 square feet, and moved from the 87th floor to one in the 40s, said Steve Vitoff, a building spokesman.

Also vying for tenants at the site are Silverstein’s 3 World Trade Center, which has about 2 million unrented square feet, and his planned 3.1 million-square-foot tower at No. 2, which needs lease agreements to kick-start development.

Midtown South

The presence of xAd, High 5 and MediaMath shows the Trade Center can lure technology and other creative companies away from such neighborhoods as Chelsea, Soho and the Flatiron District. Demand in those areas, part of a district known as midtown south, has pushed office vacancies to the lowest in the U.S.

“Attracting some of the tech users this year was something we thought might have taken a little longer to develop,” Tara Stacom, the Cushman and Wakefield Inc. broker working with Durst to fill 1 World Trade Center, said in an interview last month. “They realized the value of new construction was something they weren’t getting in midtown south.”

Higher Rents

XAd and High 5 Games are paying about $55 to $60 a square foot at 1 World Trade, minus any incentives such as government subsidies and free-rent periods, according to Compstak, a New York-based commercial-property data provider. That’s more than the average effective rent of $44 a square foot for the best- quality space in lower Manhattan.

Durst in May reduced rents for the tower’s middle floors by about 10 percent, saying the reductions were made after initial talks with potential tenants.

One World Trade Center was at the top of the list when Servcorp Ltd. shopped for a fourth New York location, said Chief Operating Officer Marcus Moufarrige. The Sydney-based firm provides temporary high-end offices to global companies, targeting the most famous and opulent properties in the markets it serves, such as London’s “Cheesegrater.”

“We’ve been working on this deal for three years,” said Moufarrige, whose company rented about 35,000 square feet at 1 World Trade, the entire 85th floor. “It’s going to be the most iconic building in the world. There was no hesitation in us wanting to be there.”