Ground Zero showing clear signs of rebirth

When Richie Schuler goes to work at One World Trade Center each day, he measures progress by the view.

"The higher you get, the more you can see," said Schuler, 45, a welding supervisor from Lindenhurst who, along with his team of 45, is beginning work on the 65th floor of the 104-floor structure above a memorial plaza set to open in four months. "You're able to see far into western Jersey now because we're over all the [other] buildings. Now you're starting to get a real nice view."

President Barack Obama's visit to lower Manhattan last week highlighted how a vision of rebirth has finally started to take shape in steel, glass and concrete on what is some of the most valuable real estate in the world.

For years the pit where the Twin Towers fell on Sept. 11, 2001, was a scar on the cityscape, mired in delays caused by legal, financial and political wrangling.

Still facing challenges

Significant challenges remain, including how quickly the new office space can be filled, and by whom. Debate still swirls around the museum and memorial over the placement of victims' remains and the presentation of their names. And some financing difficulties loom.

"I don't think people realized how complex it was," said Alan Reiss, Port Authority of New York and New Jersey deputy director for World Trade Center construction.

Coordinating work among interlocking office towers, active railway systems, roadwork, gas and water lines on the 16-acre site has been daunting, said Reiss, an Oceanside resident who ran the World Trade Center before the Port Authority leased it to Silverstein Properties in 2001.

Getting the memorial plaza prepared for the 10th anniversary of the 9/11 attacks meant putting a roof on top of the Port Authority Trans-Hudson commuter hub before finishing the underground work.

To the southeast of One WTC, the first of three planned towers by Silverstein -- Four World Trade Center -- now rises 23 floors (out of a planned 64) above the street. Both buildings are going up at the rate of one floor per week.

"The events of the last few days and the president's visit to Ground Zero have prompted people to look again at what's going on at the World Trade Center," Janno Lieber, Silverstein's WTC project director, said last week. "What they're seeing is a site that is fully under construction for the first time and which is making really rapid progress."

Occupants began filling up the mirrored Seven World Trade Center tower after it was completed in 2006. Today it's more than 90 percent leased, Lieber said.

Several issues stalled the development on the rest of the site. The Port Authority fell behind schedule in excavating and readying the site. Disputes over money, security and the construction timetable led the authority to take over development at One WTC in 2006.

Help finally came in 2008

Reiss credited the arrival of Chris Ward as the Port Authority's executive director in 2008 with getting things moving.

"You had all these different competing priorities," Reiss said, and Ward "was able to sort that out and establish the priorities and give us guidance and then support us, and just let us build."

The Port Authority and Silverstein now meet regularly to coordinate construction, Reiss said.

The financial meltdown in 2008 made financing more difficult and Silverstein, which leases the site from the Port Authority, demanded more public funds to construct its towers. The authority initially balked at a request to guarantee $2.59 billion of tax-exempt bonds the developer plans to use to partly finance two towers.

The authority eventually agreed, but with conditions requiring the second tower, the 71-floor Three World Trade Center, to be substantially pre-leased before construction can move beyond the seventh floor, and that 79-floor Two World Trade Center not be built until there is enough market demand.

Even so, the developer hasn't been able to use the bonds now in escrow. Market conditions and investor questions over the guarantee have thwarted several attempts, including one last month, to take half the bonds out of escrow to finance Four WTC.

In January, Moody's Investors Service revised the authority's credit rating to negative in part because of "increased debt and commercial risks arising from capital projects at the World Trade Center site" and cited risks at Four WTC and subsidies for non-self-supporting projects as challenges.

The developer has used insurance proceeds to add to the 64-story Four WTC tower to be completed in 2013. Its only tenants so far are the Port Authority and New York City.

The authority and Silverstein last month issued a statement that they would move forward with the bond financing once the market improved and investor issues were addressed.

Lieber said the guarantee issue would be resolved within months. He also said that "Green high-tech space" and access to mass transit would attract top-tier companies.

"As New York's economy has recovered, vacancy rates for office space have dropped significantly, rents are rising again and, most important, there are fewer and fewer large blocks of space for the kinds of tenants who are considering the World Trade Center," he said.

Not many tenants

Reiss said potential tenants look at One WTC every day. Formerly called the Freedom Tower, the Port Authority changed the name in 2009 to One World Trade Center to be more marketable, the authority said at the time.

Real estate firm Cushman & Wakefield, which serves as leasing agent on One WTC, reported that downtown office market vacancy declined 1 percentage point to 10.5 percent in the first quarter, while asking rents increased 1.1 percent to $39.22 per square foot.

"The improving economy has helped, but as incoming residents have changed the area into a 24-hour community, the office market has also changed," said Cushman & Wakefield economist and researcher Ken McCarthy.

"It used to be a financial and government market; now it's a much more broad mix of tenants," he said. "That means there's a lot larger tenant base to draw from and that's helping the downtown market as well."

The Downtown Alliance, a business improvement district, reported that 55,000 people lived south of Chambers Street last year compared with 22,961 at the beginning of 2001.

Even so, One WTC has only a single tenant. Beijing-based Vantone Industrial Co., Ltd., signed a lease two years ago for nearly 200,000 square feet where it plans to create a Chinese culture and business center. The authority is negotiating with Condé Nast to lease a reported 1 million square feet in the 2.6 million-square-foot tower. State and federal agencies also committed to leasing space but the deals haven't been finalized.

Last week the National September 11 Memorial & Museum released the final plan for displaying victims' names around reflecting pools. Joseph Daniels, president and chief executive of the memorial and museum acknowledged that some people wanted more information included about the victims.

The placement of unknown remains at the site has also angered some victims' families.

"Our responsibility is to respect the wishes of all the family members that back in 2003 just could not have been clearer to have the remains brought back to the site," Daniels said.