Rents at the famous One World Trade Center in New York City have been cut by about 10 percent as office space leasing activity is still slow in the tallest building of America.
One WTC has remained half vacant for the past three years. Only 55 percent of the building is leased and no private tenant has signed a lease agreement in the last three years.
"The market's not there," said Douglas Durst, owner of WTC who bought stakes in the building from Port Authority in 2011, to The Wall Street Journal.
"When we started in 2011, everybody expected the economy to take off, and obviously that hasn't happened."
Durst also added that a lot of tenants have looked for space in the building but the asking rents dampened their leasing spirits. Some also speculate that security concerns may be barring prospective tenants from occupying space in the building. However, Durst denied "security" being a problem.
More recently, it was reported that Hugo Boss - the fashion brand - was looking to move its Big Apple headquarters to the building. However, a source close to Hugo Boss told the Commercial Observer that the deal wasn't happening "anytime soon" and the reports doing the rounds are largely exaggerated.
But, experts had foreseen the fate of One WTC long back. Citing real estate sources, Businessweek wrote in November 2014 feature that the owners would eventually have to settle for lower asking rents.
"At the end of the day, supply and demand will determine what that space trades for," said Michael Cohen, tri-state regional president of Colliers International, to Bloomberg News.
Indeed, demand for what the World Property Channel is calling "Trophy buildings" has gone up, especially with media and tech companies flocking to the city.
"Pricing and velocity at the top of the market have reached their strongest levels since 2008," said Peter Riguardi, president of New York tri-state operations at Jones Lang LaSalle, to the website.
"More than half of Manhattan's top-tier trophy properties posted a vacancy rate of less than 5.0 percent. Demand from smaller financial services tenants, including hedge funds and private equity firms, has increased parallel to recent Wall Street gains. Compounding this demand, sovereign wealth funds and other foreign-based financial tenants have emerged as new occupiers, leasing Manhattan locations that are equivalent in profile to their offices in London, Singapore or Hong Kong," he explains.
For now, the One World Trade Center has some prestigious tenants like Conde Nast, Morgan Stanley and Bank of America. It was also recently named the tallest building of America by the Council of Tall Buildings and Urban Habitat.
