The bistate agency will be able to recoup most, if not all, it has invested in rebuilding the World Trade Center site since the attacks of Sept. 11, 2001, according to a study by New York University’s Rudin Center.
The World Trade Center site will pay for itself in two decades, according to a new report by New York University.
NYU’s Rudin Center, which focuses on transportation and infrastructure, released a study Thursday showing that the Port Authority of New York and New Jersey will be able to recoup the nearly $7 billion it is anticipated to invest in the rebuilding of the 16-acre site.
“The Port Authority will recover more than 97% of its capital outlay by 2036,” said Mitchell Moss, dean of the Rudin Center. “It has also had a tremendous regional impact on economic development and has been a catalyst for the diversification of downtown’s economy.”
According to the Rudin Center, the Port Authority will have spent $6.7 billion of its own funds by 2019, when the site’s redevelopment will be largely complete. That money is sorely needed at a time when the bistate agency is contemplating huge infrastructure projects, namely the estimated $10 billion replacement of its bus terminal on Eighth Avenue. In total, the authority has spent about $17 billion on rebuilding WTC, but about $10 billion of that has been paid for by government, insurance and other money.
The Port Authority will be able to recoup the money it will pour into the site from several sources, the Rudin Center said. Among them is the sale of the final development parcel at the site, 5 WTC, which could generate hundreds of millions of dollars for the agency. The agency will earn hundreds of millions in rental income from tenants at the completed office towers. It will benefit from further leasing at 1 World Trade Center, where it has already le rented more than 1 million square feet to Condé Nast.
Additionally, the Port Authority will rake in money from its deal with Silverstein Properties, which built 4 WTC and is in the process of erecting 3 WTC. Silverstein is also in the process of finalizing a huge lease with News Corp. and 20th Century Fox that will allow the developer to build a third tower on the site, 2 WTC. The agency collects ground rent from Silverstein for those sites and is entitled to 15% of the value of the three towers if the developer refinances the properties—an event that could eventually net the authority $1 billion, the Rudin Center estimates.
So far, the Port Authority has collected money from a number of other sources: a sale of the site’s retail space and a $100 million stake in 1 WTC that it sold to the Durst Organization. The agency also leased 1 WTC’s observation deck to Legends in a deal that is expected to generate more than $800 million.
Still, there has been chatter from some that the Port Authority should sell off the WTC site and its other real estate assets to focus on transit and regional infrastructure. Moss said it should resist that suggestion. “You don’t sell a real estate asset just before it’s about to go up in value,” he said.
Although public perception of the WTC site has improved in recent years as construction has neared completion and the site has attracted office tenants, tourists and shoppers, the rebuilding, which fell years behind schedule and clocked in billions of dollars over budget, had been widely viewed as a financial sinkhole for the bistate agency.
“The agency has focused on managing the WTC project to remain as close to schedule and budget as possible,” the Port said in a statement. “As the WTC reconstruction continues to wind down, the Port Authority also has strived to return to its core transportation mission of state-of-good repair work and new infrastructure investments … while pursuing the Special Panel on the Future of the Port Authority recommendation to phase out of real estate ownership and prudently look to divest non-core real estate holdings.”
The report also noted the large economic impact the site has had on lower Manhattan. The Rudin Center said 51,000 people will work at the WTC site, accounting for two-thirds of the job growth in the area over the next 10 years. Those employees will earn a total of about $7 billion in yearly wages. The rebuilding will also generate about $11.9 billion in salaries for construction workers and related job