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Old Posted May 1, 2007, 9:31 PM
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GROUND ZERO'S SILVERSTEIN EXPECTS BROKERAGE TENANTS

By Dan Levy and Brian Sullivan
April 25 (Bloomberg)

Developer Larry Silverstein said he expects to lease space at the three towers he's building at the World Trade Center site to Wall Street firms seeking new securities trading floors.

The lower levels of the two of new towers, designed by Norman Foster and Richard Rogers, will have a total of nine trading floors with more than 50,000 square feet each, Silverstein said. The top of Foster's lower Manhattan building, canted in the shape of four diamonds, will also have "hedge fund space," he said. A third building is being designed by Fumihiko Maki.

"All three buildings will provide massive trading floors that are unavailable elsewhere in the city," Silverstein said in an interview. "We can provide this under spectacular circumstances."

Trading space is increasingly important for the world's biggest securities firms, which last year made more than half their revenue from buying and selling stocks, bonds and currencies. Merrill Lynch & Co., the world's biggest brokerage, Lehman Brothers Holdings Inc., and JPMorgan Chase & Co., are all in talks with New York developers about expanding trading space, people familiar with knowledge of the situation said in the past month. Silverstein declined to name the firms he's spoken with.

'Very Strong' Market

"We are producing space that is perfectly suited for the needs of major financial institutions," said Silverstein, 76.

"The market in New York is very strong. There is a need for quality space."

Silverstein said construction will start on two of the buildings at the trade center site in January. The Maki-designed property may not begin until July 2008, he said. The Foster building is at 200 Greenwich St. and the Rogers building is at 175 Greenwich St. The third building hasn't been given an address.

"The train is now moving down the tracks," Silverstein said. "We go into the ground the first of January for two buildings."


Counting the 1,776-foot Freedom Tower, which Silverstein is overseeing under contract to the Port Authority of New York and New Jersey, nearly 10 million square feet will be under way in lower Manhattan by the middle of next year.

Silverstein bought the leasehold for the World Trade Center's twin towers six weeks before the Sept. 11, 2001, attack that destroyed them. He has an agreement with the Port Authority to build 6.2 million square feet of offices at the 16-acre site.

Office Rents Rise

Manhattan office rents surged to an all-time high in the first quarter with job growth in the financial industry pushing the vacancy rate below 6 percent, according to broker Cushman & Wakefield Inc. Asking rates for the best space averaged $64.54 a square foot.

The only office project completed so far at Ground Zero is a new building at the site of 7 World Trade Center, which has 1.7 million square feet and is 70 percent leased, Silverstein said.

The original 7 World Trade collapsed on Sept. 11 when the antenna from the World Trade Center's North Tower fell and "cut through the façade" of Building 7, rupturing fuel lines leading to storage tanks used by New York City's emergency services, Silverstein said.

"The cut fuel lines started a fire that started to burn around 9 a.m. and burned until 5 or 5:30 p.m.," when the building collapsed, Silverstein said.

The new 7 World Trade was built with security and safety systems that makes it "literally impregnable," he said. It has a two-foot-thick reinforced concrete core, better fireproofing and two emergency staircases that split into four in the lobby.

Moody's Investors Service has leased one-third of the 52-story building. Other tenants are ABN Amro and Darby & Darby PC.

With reporting by David M. Levitt in New York
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