http://online.wsj.com/articles/for-t...iew-1414367952
For Tourists, a $3.9 Billion View
One World Trade Center Hopes Visitors Generate One-Quarter of Tower’s Revenue
By ELIOT BROWN
Oct. 26, 2014
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When One World Trade Center, the country’s tallest and most expensive office tower, opens its doors to its first tenants early next month, its owners aren’t just counting on rent from office space to pay the bills. They are counting on millions of tourists looking for a view.
The owners of the skyscraper that cost $3.9 billion to build are expecting the observation deck—just three floors of the tower compared with 70 office floors—to bring in nearly one-fourth of the building’s annual revenue by 2019, or a projected $53 million, according to representatives of the ownership group.
More than 3.5 million visitors a year are expected to zip up high-speed elevators to an observation space 1,250 feet above lower Manhattan. While the developer of the observation space, Legends Hospitality LLC, hasn’t announced prices, they are expected to be competitive with the Empire State Building’s observatory, which charges $29 and up for an adult.
Even with the revenue from tourists and pricey office rents, the building is likely to be worth less than its construction cost, an unusual circumstance due largely to lengthy delays in building and security measures, including a 20-story concrete- and-steel base. The building’s owners, the Port Authority of New York and New Jersey and the Durst Organization, are looking at the deck—set to open in the spring—to help close the gap.
If the office space is 95% leased by 2019, as hoped, the group projects it would have $144 million in annual operating income. Manhattan towers with similar income today are valued at some $3 billion, though sometimes considerably more.
“It is going to be a world- class visitor experience,” said Patrick Foye, the Port Authority’s executive director. “We think that it is an attractive financial proposition.”
The sky-high ambitions are based on a surprising fact: observation decks have become cash machines. Amid a growing trend of tourists clamoring for views, the Empire State Building now gets more than 40% of its revenue from its two floors of observation decks, bringing in $101 million in 2013, up from $78 million in 2010, according to filings by the building’s owner.
Chicago’s Willis Tower, formerly known as the Sears tower, has said traffic has exploded since it added a set of clear boxes that allow visitors to stand out on glass and look down, attracting 1.5 million visitors a year, up more than 30% since 2009. A layer of glass shattered on the floor of one of the boxes in May, generating many headlines—it was nonstructural glass, posing no risk, the owners said—and visitors have continued to stream in for the views.
Not to be left behind, the nearby John Hancock Center in Chicago added a sloped glass feature that allows tourists to lean and tilt out over the city’s streets.
On the West Coast, the owner of Los Angeles’ U.S. Bank Tower—the city’s tallest—is converting empty office floors to an observation deck that opens out into the air. In Manhattan, a new skyscraper west of Midtown is planning a large deck, causing some to wonder if there is enough demand for all the observatories.
“It’s got to be at least four times more valuable as observation space than as office space,” said Richard Stockton, chief executive of the U.S. arm of Overseas Union Enterprise Ltd., which owns the U.S. Bank Tower. He said he considered other uses like hotel space or residential space for the floors, ultimately settling on a deck. “You can charge between $20 and $30 for tickets to go to the top and people will stay there on average 20 minutes or so,” he said.
Office towers aren’t the only beneficiaries. Observation wheels like the London Eye—mammoth-sized Ferris wheels—are sprouting around the world. Singapore, Seattle and Las Vegas each have their own, while one is planned for New York’s Staten Island. Even nature can’t escape the fad: entrepreneurs have put a glass walkway on the edge of the Grand Canyon where tourists can look down.
Just what explains the trend isn’t entirely clear. Many in the industry believe demand is growing in part because operators are positioning the observatories as experiences akin to theme-park rides. Such is the thinking behind features like the Willis Tower’s glass box, or a glass floor recently installed at the Eiffel Tower in Paris. Others point to changes in tourism, in which growing ranks of visitors are looking for more than just museums and shopping in cities.
In turn, a small industry of observation deck operators has been born. For instance, Legends Hospitality, the operator of One World Trade, specializes in concessions and sports marketing and is owned in part by the New York Yankees and Dallas Cowboys. It will share a portion of its revenue with One World Trade’s owners.
The Port Authority previously intended to include a high-end restaurant at the building’s peak akin to the original Twin Towers’ popular venue, Windows on the World. But it ultimately decided it could get more money by devoting as much space as possible to the observation facility, which is to include a restaurant and catering space.
The World Trade Center’s original south tower also included an observation deck popular with tourists.
In 2013, lower Manhattan had an estimated 9.6 million visitors, according to the Downtown Alliance, a number expected to grow as the World Trade Center is completed.
Whatever is driving the demand for observation venues, the trend is a welcome one for One World Trade. Leasing has been slow amid a sluggish office market, as employers pack their workers into less space and big banks cut back.
The 104-story tower—when counting mechanical floors and the bunker-like base—is to open less than 60% leased, and hasn’t announced a large deal with a private tenant since publisher Condé Nast in 2010. It lowered its rents on much of its remaining space earlier this year, and many wonder if it will indeed be able to fill up by 2019, as its owners are expecting.
Of course, the tower was conceived more as a symbol of resilience than a cash cow. Still, the owners are looking to get as much income as they can from the tower, and even next year, it is slated to turn an operating profit of about $55 million. “We want to earn a fair return,” said the Port Authority’s Mr. Foye.
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Meanwhile, at look at how security around the site is shaping up...
http://www.downtownexpress.com/2014/...on-liberty-st/
W.T.C. offices begin reopening Monday with tighter security on Liberty St.
October 24, 2014
BY JOSH ROGERS
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Port Authority employees on Monday, will be the first office workers to return to work at the World Trade Center since terrorists took the Twin Towers down just over 13 years ago. The reopening of 4 W.T.C. on Oct. 27 will ironically mean less freedom on Liberty St., as most vehicles will no longer be able to get through.
Cars and trucks doing business at the W.T.C., or making deliveries to Liberty St. residents or stores, or carrying residents will be permitted with proper ID. People visiting residents on the block will also be permitted to drive through after a short stop expected to be done in under two minutes.
The city official said although residents in cars will have to show ID, that short slowdown will be counterbalanced by the fact that there will be less traffic on Liberty now that cars and trucks will no longer be able to use it as a through street.
In addition, Cedar St. traffic has recently been reversed to flow west, and Washington St. south of the W.T.C. will be reopened to traffic some time next week.
The following Monday, Nov. 3, the first workers will return to One W.T.C., a k a the Freedom Tower, when Conde Nast moves into the building.
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NEW YORK is Back!
“Office buildings are our factories – whether for tech, creative or traditional industries we must continue to grow our modern factories to create new jobs,” said United States Senator Chuck Schumer.
Last edited by NYguy; Oct 27, 2014 at 3:07 PM.
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