Wall Street Journal
Rebuilding Ground Zero
By STEVE MALANGA
May 12, 2007; Page A11
Larry Silverstein began spending every morning at the World Trade Center shortly after he inked a 99-year deal to operate the complex in July 2001. The New York developer would have breakfast at Windows on the World, the restaurant on the 107th floor of the North tower, and then meet for several hours with tenants. But on the morning of Sept. 11, 2001, he was at home, dressing for a doctor's appointment his wife had made for him, instead of at his usual table at Windows. "I had said to my wife, sweetheart, cancel my doctor's appointment. I have so much to do at the Trade Center," he recalls. "She got very upset and told me I had to go. As it turns out, that saved my life."
While he was still getting ready for his doctor's appointment, Mr. Silverstein learned that the first plane hijacked by terrorists had struck the North tower. He turned on his television just in time to see the second plane fly into the South tower. No one at Windows on the World survived.
A few weeks ago, as Mr. Silverstein and I met at his headquarters on the 38th floor of 7 World Trade Center, the 52-story skyscraper that he quickly rebuilt just north of where the twin towers once stood, we could watch the reconstruction of the rest of the Trade Center site proceed. He pointed out to me the footprints of the three other office towers he is developing there and predicted with some confidence that the site, which will include a fourth skyscraper, the so-called Freedom Tower, as well as a new transportation terminal, will be completed within five years. "I just want to hang around until then to see this through to completion," the 75-year-old developer told me.
Mr. Silverstein can take some satisfaction in watching the cranes operate after a long, tortuous and very public planning process in which the commercial revival of the site was often in doubt. He's fought against skeptics who claimed that downtown Manhattan would never again support an office market after the devastating attacks. He's listened patiently to some relatives of those who died on 9/11 as they lobbied against redevelopment, claiming the site was "hallowed ground." He's squared off against public officials who tried to hijack the redevelopment for their own agendas, pushing to turn Ground Zero into everything from parkland to an arts-and-cultural center to a giant housing project.
In the end, however, the vision that he fought for of a rigorous commercial redevelopment -- one that viewed the Trade Center as the hub of New York's financial district and an important symbol of our economic system -- is what won out. Now, with 7 World Trade already two-thirds leased and big tenants as well as investors starting to circle around the other proposed buildings, the marketplace looks to be endorsing Mr. Silverstein's vision and rewarding his tenacity. New York will be the better off for it.
"The financial center's locomotive was the World Trade Center," he says, "and for the sustenance of the city and the region, we need to get those jobs back."
Although 9/11 thrust Mr. Silverstein into the public's eye, his association with the World Trade Center stretches back more than a quarter century, to 1980, when he obtained the right to develop a plot across the street from the North Tower. There he built a 1.9 million square foot skyscraper -- the first 7 World Trade Center -- which nearly bankrupted him. Drexel Burnham Lambert planned to lease the entire tower but pulled out just days before signing the deal, when government investigations into the activities of the head of its junk bond department, Michael Milken, emerged as a threat to the firm's future growth. Drexel ultimately collapsed, and Mr. Silverstein was left without a major tenant until Salomon Bros. leased half the building two years later.
Yet despite that brush with failure, erecting 7 World Trade only sharpened his appetite for more. "I remember at the topping out of 7 World Trade looking up at the twin towers and thinking, my building is huge, but it is made diminutive by the twin towers," he says. "So I said to myself, wouldn't it be incredible someday to own those?"
What seemed like only a pipe dream became a reality when New York Gov. George Pataki and New Jersey Gov. Christie Whitman decided to get the bi-state government agency that controlled the towers, the Port Authority of New York and New Jersey, out of the real-estate business and sell off the twin towers. The Port Authority had opened them in the early 1970s, just as New York's economy was hitting the skids, and the heavily subsidized towers became a drag on the city's real-estate business, dumping some 10 million square feet of office space on an already saturated market. Though the Port Authority filled the towers for years with leases to government agencies, by the 1990s, when a redevelopment plan engineered by Gov. Pataki and then-New York City Mayor Rudolph Giuliani spurred a commercial revival in downtown Manhattan, the Trade Center became prime property.
Bidding to win control of the towers consumed Mr. Silverstein for several years. So preoccupied did he become that one day, just before bids were due, the developer was walking home across East 57th street in Manhattan while turning over some numbers in his head when he failed to see a car run a red light. It struck him, sending him flying through the air and breaking his pelvis in 12 places. He finalized his bid for the towers while in the hospital and eventually cemented a deal with the Port Authority. It was to be his crowning achievement, and after he integrated the new asset into his company he planned to turn over operations to his children and spend his remaining years cruising with his wife on his yacht. Instead, 9/11 intervened.
"After the attacks, I said to my wife, if you want to go sailing, I'll do that. If you want me to rebuild the Trade Center, I'll do that," says Mr. Silverstein. "And she said to me, you know you won't be satisfied with anything except rebuilding, so let's just get on with it."
The tale of reconstruction is actually two separate stories -- one of an unfettered Mr. Silverstein quickly rebuilding 7 World Trade, and another of a government-led effort to create a new master plan for the rest of Ground Zero foundering over a host of issues.
Mr. Silverstein began planning for a new 7 World Trade -- which he controlled entirely and which had collapsed on 9/11 along with the towers -- barely a month after the attacks. Although in early 2002
Gov. Pataki and the head of the Lower Manhattan Development Corp. asked him to slow down preparations for rebuilding 7 World Trade to accommodate government planning for the rest of the site, he pressed ahead, putting shovels in the ground by May of that year and opening the tower for business in the spring of 2006.
But if Mr. Silverstein thought his quick work -- which for several years represented the only signs of progress around the site -- was going to earn him congratulations, he was mistaken. Soon after 7 World Trade opened, New York City Mayor Michael Bloomberg criticized him for not leasing it more quickly, claiming that the developer was asking prices that were too high. Government officials publicly pressured him to complete a deal with a Chinese developer who was to be the tower's first tenant, and then excoriated him when he cancelled the deal after the prospective tenant failed to provide adequate details on its financing.
But since then Mr. Silverstein has managed to lease 1.1 million square feet of 7 World Trade to blue chip tenants like Moody's, at rents that are 50% higher than what officials were urging him to accept.
"I simply did not listen to all the naysayers because I was spending my money, not theirs, and fortunately I had no government involvement in 7 World Trade, which gave me the opportunity to do what I do best," he says.
While construction proceeded on 7 World Trade, Mr. Silverstein got bogged down in the battle over how to redevelop the rest of the site. The agency charged with leading the redevelopment was torn by conflicting visions and tried to shoehorn as much as possible into their plan -- a museum, a memorial to the dead, a home for a major New York cultural institution, residential development and office space. Critics urged cutting back the office space to make room for these varied uses. In the midst of his re-election campaign, Mayor Bloomberg even declared that the market couldn't support new skyscrapers anyway. He advocated instead building housing where the towers once stood,
calling to mind a glum prediction about Manhattan by a character in Ayn Rand's "The Fountainhead": "The age of the skyscraper is gone. This is the age of the housing project." The New York Daily News responded to the mayor's imprecations with the headline: "Butt Out, Larry."
Even so, a reviving office market and soaring interest in 7 World Trade helped finally persuade planners to focus on a commercial reconstruction. But once the master plan was in place, government officials did all they could to move Mr. Silverstein aside, ironically claiming that the developer must relinquish some of his control to government so that the rebuilding could move more rapidly. Mayor Bloomberg threatened to withhold Liberty Bonds, which Congress had created to help finance reconstruction, while the vice chairman of the Port Authority called Mr. Silverstein "greedy" for not agreeing to the state's demands.
Finally, Mr. Silverstein decided to give back ownership of the so-called Freedom Tower to the Port Authority -- though he will build the tower -- while retaining control of the three remaining office buildings on the site. The agreement, as well as court decisions which require insurers to pay Mr. Silverstein and the Port Authority some $4.6 billion toward new construction, have finally cleared the way for building to begin.
It is fitting that the final plan for Ground Zero owes such a debt to a private developer and the marketplace. The terrorists attacked the twin towers because they embodied the values of our democratic free-market economic system.
The memorial that will rise on Ground Zero will make no reference to those values, nor seek to celebrate our way of life. Rather the memorial, in the way of postmodern monuments, will merely ask us to ponder the absence of those who died.
The real monument on the site will be its skyscrapers, and the buzz and hum of activity within them will celebrate the continuing triumph of the system that the terrorists attacked. "After five and a half years of laborious involvement in politics, we finally are at a point where we are building," says Mr. Silverstein triumphantly. "This is what I do."
Mr. Malanga, a senior editor at City Journal, is the author of "The New New Left" (Ivan R. Dee, 2005).
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