One World Trade Center Public Private Partnership
The Port Authority of New York & New Jersey (the PA) is the fee owner of the entire 16-acre World Trade Center site. The challenge was to design and implement a solicitation process to select a private-sector development partner to play an integral role in the construction, leasing, management, and operation of One World Trade Center (OWTC) and to make an equity investment in the development on the most advantages terms for the PA.
In January 2010, the PA solicited proposals from select, best-in-class New York developers with respect to the acquisition of a membership interest in the entity holding the long-term net lease in OWTC. Cushman & Wakefield created a competitive bid process, with the PA ultimately receiving proposals from six highly interested parties.
As financial advisor to the PA, Cushman & Wakefield provided negotiating assistance to achieve the following PA objectives: acquire private-sector development expertise; reduce management oversight and PA staff necessary to manage the project; improve OWTC’s image and market competitiveness; maximize property performance/valuation; and establish a “one-stop shop” for development, leasing, and management of project.
The proposals received all had different structures, risk sharing, and investment returns. Cushman & Wakefield evaluated each developer’s qualitative aspects (reputation, global reach, platform); specific real estate expertise (leasing, development, construction, management); and quantitative cost of the individual proposals (investment returns, non-investment derived financial benefits). Several rounds of discussions took place with each developer, as the PA asked candidates to refine their proposals and address key concerns. The PA Board finalized agreement with The Durst Organization (Durst) in August 2010, and in June 2011 documentation was completed. Cushman & Wakefield created and executed the public-private partnership between the PA and Durst, jump-starting the leasing up of the three-million-square-foot OWTC tower, and subsequently completing a 1.2-million-square-foot lease to Condé Nast.