Feature: Ten Years Later, What Have We Learned?

Even for famously immodest Manhattan, the 16-acre WTC redevelopment project is an exercise in superlatives. But the significance of the World Trade Center's redevelopment - and the shattering event that precipitated it a decade ago - extends far beyond the boundaries of the site.

September 12, 2011
By Paul Rosta, Senior Editor

This story appeared as the cover story in the September 2011 print edition of Commercial Property Executive.

Even for famously immodest Manhattan, the 16-acre redevelopment project rising a few blocks east of the Hudson River near the island’s southeastern tip is an exercise in superlatives. In 2013, when construction is complete on the first of at least four new office towers, the 3 million-square-foot, 1,776-foot-tall One World Trade Center will rank as the nation’s tallest building. Boasting 9 million square feet of office space, a new $2 billion transit hub, designs by world-renowned architects and cutting-edge security and sustainability features, the World Trade Center figures to rank among the most significant redevelopment projects of the early 21st century.

But the significance of the World Trade Center’s redevelopment—and the shattering event that precipitated it a decade ago—extends far beyond the boundaries of the site. The Sept. 11, 2001, terrorist attacks on the World Trade Center and the Pentagon have influenced commercial real estate no less than they have every other aspect of American life. Even in the midst of the past decade’s roller-coaster ride, the commercial real estate industry has gone to commendable lengths to address the challenges posed in the aftermath of Sept. 11. New best practices have been put into place on multiple fronts, and the 10th anniversary of the attacks offers an occasion to re-energize the discussion. Yet a look at the larger picture is also a reminder that not all new ideas are being carried out consistently, and that a skeptical look at some accepted practices could benefit the industry.

During the first several years after the attacks, the response by government officials and commercial real estate leaders was quick and comprehensive. Their initiatives produced innovations in design, building security, technology, risk management, insurance and property management.

In a far-reaching shakeup of the federal government, creation of the Department of Homeland Security in 2002 brought a score of security-related agencies together under a single umbrella. Researchers from the National Institute of Standards and Technology and other expert groups painstakingly analyzed the causes of the Twin Towers’ collapse and developed wide-ranging recommendations for improving building construction and design.

Building security got a fresh look and an overhaul, particularly for high-profile commercial buildings in New York City and public buildings around the country. Owners and designers explored new strategies to make buildings more resistant to attack. On the risk management side, industry associations successfully pressed Congress to create a federal backstop that allows owners to obtain insurance coverage for terrorist incidents.

It is impossible to tell how important these measures have been in preventing another incident in comparison with intelligence gathering by law enforcement, the weakening of terrorist networks by military action or sheer good fortune. The sobering reality, of course, is that the possibility of another attack is both ever present and impossible to predict. Inevitably, responses by both the public and private sectors have varied widely in effectiveness during the past 10 years. The passage of time has softened the sense of urgency that marked the first years after the attacks. In fairness, many other issues have competed for attention in recent years, including a mid-decade boom in investment and leasing activity that was followed by an historic downturn. The unsettled financial climate that persists today is forcing owners and consultants to weigh sometimes conflicting priorities in allocating scarce resources.

One vital area that has demonstrated marked gains is cooperation between the real estate industry and public-sector stakeholders like government agencies, law enforcement and other entities. By many accounts, relations between the government and real estate sectors left much to be desired, especially in the early years. But years of concerted efforts by service providers, industry groups and public agencies have improved those ties significantly. “It’s actually enlightened both sides,” said Jeff Johnson, COO of Jones Lang LaSalle Inc.’s property management business. Organizations like the Real Estate Roundtable’s Homeland Security Task Force and the Building Owners and Managers Association have worked to educate federal officials about the industry’s concerns and challenges on multiple fronts. Business and government have learned to cooperate on areas of mutual interest, sharing information and refining best practices.

Many aspects of commercial real estate that have been addressed fall into the area of risk management. In the months following the Sept. 11 attacks, owners, investors and insurance carriers alike found themselves in uncharted territory. The most prominent insurance-related legal case to emerge was the five-year battle between World Trade Center developer Larry Silverstein and the consortium of seven carriers that insured the property.

Silverstein argued that the assault on each of the World Trade Center’s towers constituted a separate insured event, and demanded that the carriers were required to pay $3.5 billion for the loss of each tower. Years of litigation ended in May 2007 with a $2 billion settlement that brought the total insurance payments on the Twin Towers’ destruction to more than $4.5 billion. The settlement was also pivotal in providing capital for the redevelopment to move forward.

Beyond the dispute stemming from the destruction of the towers, Sept. 11 resulted in broader structural changes to commercial property insurance. The period immediately following the attacks was marked by “total confusion in the marketplace,” recalled Gail Cardwell, the Mortgage Bankers Association’s senior vice president for commercial and multi-family. Owners found themselves trapped by a classic Catch-22: Even though lenders were requiring their clients to provide terrorism insurance, “It was very difficult for the primary insurer to quantify the risk,” Cardwell recounted.

At the urging of the MBA and other industry groups, Congress moved quickly to break the logjam. Enacted in 2002, the Terrorism Risk Insurance Act established a federal financial backstop for insurance carriers and policyholders on commercial properties. Since then, TRIA has been reauthorized twice, most recently four years ago. In its current version, known as the Terrorism Risk Insurance Reauthorization Act, the law covers as much as 85 percent of losses in a single year, up to a $100 billion limit. A crucial change to the 2007 version was the expansion of the definition of covered incidents to include domestic terrorism as well as attacks sponsored by foreign entities. All in all, Cardwell said, the various versions of TRIA have carried out the mission of enabling property owners to meet lender requirements.

Besides questions of financial security, the Sept. 11 attacks also prompted a renewed emphasis on the physical security of buildings and their occupants. Although it is difficult to determine how effective the new security measures have been in thwarting terrorist attacks, raising the bar has become a priority, especially for high-profile properties in major markets.

In this area, government agencies—particularly at the federal level—have led the way. Following the Sept. 11 attacks, the federal government further refined risk assessment procedures that originated after the 1995 bombing of the Alfred P. Murrah Federal Building in Oklahoma City. In the years since Sept. 11, presenting bags for inspection, displaying photo identification and passing through metal detectors have become standard procedures at federal buildings nationwide. The availability of face-recognition technology and other cutting-edge advances provide additional security tools for especially sensitive facilities.

For commercial owners, Sept. 11 has also been a major motivation for building owners to revisit the issue of controlling access to their properties. The new awareness of security issues that dominated the discussion in the commercial real estate industry—as it did in every aspect of American life—has become part of the industry’s fabric. “The security consciousness has now been (incorporated) into the process and operation of real estate management in a way I think is going to be durable,” said Patrick Phillips, CEO of the Urban Land Institute.

While the measures may not be as comprehensive as they are in many federal buildings, security has nevertheless been stepped up in ways that are now familiar, particularly to those visiting Class A properties in New York City and Washington, D.C. Routine requirements include presenting identification, pausing at the lobby security desk to have a picture snapped and obtaining a visitor’s pass, which must be shown to a security guard before the visitor passes through a turnstile.

Compounding the challenge of establishing security measures is that they must be considered on a case-by-case basis. “There is no security code in the U.S.,” pointed out Barbara Nadel, a New York City-based architect specializing in security issues and the editor-in-chief of Building Security: Handbook for Architectural Planning and Design (McGraw-Hill, 2004). Nevertheless, owners can use federal guidelines as a starting point.

Another tool that Nadel said is finding growing acceptance is a formal analysis of potential hazards. “In the years since 9/11, owners are more cognizant of the need to do a threat and voluntary risk assessment,” Nadel said. “It’s a more effective way to determine what your security needs are.” Frequently conducted by a consultant with experience in law enforcement, the risk assessment covers areas like industrial espionage and intellectual property theft as well as violence.

Yet even though security received a heightened level of attention, research at the time suggested that building owners reacted to the new realities through modest upgrades to existing procedures rather than wholesale changes. A 2002 survey sponsored jointly by BOMA and ULI confirmed that security measures were already well established before the Sept. 11 attacks. The top measures cited by the 200-plus respondents: building alarm monitors (reported by 80 percent of the respondents), lobby security controls (74 percent), surveillance cameras (65 percent) and background checks (61 percent).

By contrast, only 15 percent of respondents had perimeter barriers, often called bollards, in place before the attacks, and those barriers were added by only 6 percent of respondents in the aftermath. More common steps focused on requiring job-site check-in and identification from vendors and adding security personnel and surveillance cameras.

In another telling finding, only 12 percent of respondents named terrorism as a concern, even a year after the most deadly attack in U.S. history. Survey respondents indicated far more concern with overall emergency preparedness. For instance, 57 percent mentioned fire safety and 33 percent cited power disruptions.

Though the survey did not break down the responses by location, it would not be surprising to find that the low ranking of terrorism in the 2002 survey reflects a geographic pattern. New York City and Washington, D.C., bore the brunt of the attacks, and that firsthand experience appears to have influenced more owners to implement practices than anywhere else in the country. “I don’t think you have that mindset in other cities.” explained Tom Justin, a principal with The Weitzman Group, a New York City-based consulting firm, and chairman of the Americas region for the Royal Institution of Chartered Surveyors. Indeed, Justin contended, “once you get out of New York, I think building security is very lax.”

At the same time, such measures have also exacted a toll from both tenant and landlord by increasing security costs while sometimes decreasing convenience to visitors and occupants. “This has been viewed as necessary, but it’s also an obstacle to certain efficiencies,” contends Larry Kosmont, president & CEO of Kosmont Cos. and a member of the Counselors of Real Estate. Perhaps even more to the point, he noted, is the questionable effectiveness of requiring visitors to present government-issued identification, sign in and have their pictures taken.

Indeed, some experts challenge the benefit of the steps that have become standard industry practice in the past 10 years. “A lot of the measures you see don’t make sense,” argued Jacqueline Buhn, president of Philadelphia-based Athenian Properties L.L.C. and a Counselors of Real Estate member. If the aim is to ward off a terrorist attack, rather than merely keeping track of who is entering the building, those procedures may be a waste of time. Instead, she maintains, “there needs to be a focus on what they’re really trying to accomplish.” Security, she said, “has more to do with building operations. What is it you’re trying to accomplish, and how do you accomplish it? … I think people need to think through the process and decide how much (security) they want and how much they want to pay for everything.”

The debate will continue over the effectiveness of these measures, but the impact on security practices extends beyond the office sector. “Prior to 9/11, no one trained security officers about terrorism and the threat of terrorism,” recalled Malachy Kavanagh, senior vice president for the International Council of Shopping Centers. “You didn’t think of a terrorist attack on malls, particularly in this country.” Meanwhile, security strategists have opened their thinking to include not only a 9/11-style conspiracy involving dozens of criminals but the detection of and response to a potential lone-wolf assailant.

To help security staff and other professionals, ICSC has prepared an online course on terrorism covering such topics as behavioral analysis, different categories of weapons, life-safety strategies and emergency response strategies. The 10-part online course is administered by the National Center for Security Research and Training at Louisiana State University.

Also in the works, Kavanagh reported, is an online tool that will enable managers to evaluate the security practices at their properties. Security measures in the retail sector have most likely played a role in discouraging both crime and future attacks, yet retail owners must also keep tabs on excessively prescriptive government efforts. “The biggest concern is always legislation that would regulate how you do business,” noted Kavanagh. Measures like mandating a set number of security officers per square foot of public space would be counterproductive, he argued.

The imperative of protecting buildings—and their occupants—from a terrorist assault has also had broad influence on design and construction strategies. “Clearly, the federal government is at the forefront of strengthening building requirements for the hardening of buildings, for the exterior envelope,” noted Rebecca Greco, who has worked on the design of numerous federal buildings as principal in the public and corporate design group for architectural firm HGA.

Stringent government standards are informed not only by the Sept. 11 attacks but also by the 1993 bombing of the World Trade Center, the 1995 bombing of the federal building in Oklahoma City and attacks on the U.S. embassy building in Somalia. Under 1999 federal law, U.S. embassies are among the buildings that must now be set back at least 100 feet from the property line. The U.S. General Services Administration, the real estate service provider for most of the federal government, also mandates a minimum 50-foot setback for certain other buildings considered to be at risk.

Such measures are exemplified by government projects at home and abroad. Nadel cites such examples as William Rawn Associates’ design for the new U.S. Federal Courthouse in Cedar Rapids, Iowa. Scheduled for completion next year, the facility’s design features a blast-resistant curtainwall, a transparent glass courtroom entrance, a retaining wall that requires minimal use of bollards to provide security, and a design that protects against progressive collapse.

U.S. buildings overseas are a continuing focus of security-related design measures. When the new $1 billion American embassy in London opens in 2017, the 12-story, 500,000-square-foot building designed by Kieran Timberlake will feature not only cutting-edge sustainable features but a footprint sized to accommodate mandatory 100-foot setbacks.

The Sept. 11 attacks also compelled many commercial building developers and designers to assess the security and design features of their projects. Commercial owners of high-profile buildings have incorporated a wide variety of measures, from blast-resistant windows to bollards that prevent potential vehicle-borne bombs from getting within striking distance. One of the first major office projects built after Sept. 11, a 1.1 million-square-foot office tower at 300 Madison Ave. in Midtown Manhattan, showed the influence of the new thinking. Brookfield Financial Properties L.P., the property’s developer, asked the project’s structural engineer to assess the building’s structural system in light of potential threats.

Among other issues, the engineering consultant, Gilsanz Murray Steficek L.L.P., analyzed the building for the impact of the loss of a column. As two members of the engineering team recounted in a 2005 article for Structure magazine, the team determined that the reinforced floor diaphragms and belt trusses provided plenty of strength but adjusted column and beam sizes. In order to increase blast resistance, GMS also modified the design of elements like the building’s curtainwall and concrete slabs separating public and private places.

More comprehensive changes emerged in the 2009 version of the International Building Code, the model code most widely used by building officials, engineers and architects in the United States. Following recommendations by the National Institute of Standards and Technology in its report on the causes of the Twin Towers’ collapse, the IBC adopted 23 new provisions. Covering a wide range of issues in tall-building design, the code stipulates the addition of a third stairway and a firefighters’ lift for buildings at least 420 feet tall.

The provisions are intended to speed evacuation and provide dedicated access to first responders. The IBC also recommended a 50 percent increase in staircase width for new high-rise buildings and measures that enhance a building’s ability to resist structural failure. Nadel speculates that future versions of the IBC code will incorporate additional NIST recommendations, including mandatory risk assessments for buildings that are more than 420 feet tall and have more than 5,000 occupants.

Geographic location will likely influence the urgency of adopting provisions of the new code, since local building officials adopt—and modify—new IBC provisions to suit local conditions. At this point, it seems telling that among major U.S. cities, only New York City adopted new building codes in direct response to the loss of the Twin Towers.

One World Trade Center will be a showcase for post-Sept. 11 design and construction strategies. The steel frame and a two-foot-thick concrete core structural system devised by WSP Cantor Seinuk are designed to stand up to extreme events. A third stairway will allow emergency personnel access while keeping two other stairways free for occupants. The building’s stairways will be 66 inches rather than the 55 inches more typical of New York City office towers, and landings will run to 15 square feet. Locating all exits directly at grade will also speed evacuation.

While the value of such top-of-the-line design strategies at a World Trade Center office tower speaks for itself, some experts are skeptical that every new code provision should be applied to office buildings across the board. One member of that camp is Carl Galioto, who worked on the design of One World Trade Center while with the building’s architect, Skidmore, Owings & Merrill. “It is very important not to overreact, and I believe that in some cases, such as the 2009 IBC requirement of a third stairway (for buildings) above a certain height, it is an example of overreaction,” contended Galioto, who left Skidmore Owings in 2009 to join HOK as a senior principal.

“Eating up resources for a third stair as a universal requirement is a poor choice for use of resources,” he added. From a practical business perspective, adding a third stairway also reduces the amount of rentable space available.

The recession has virtually shut down high-rise office development since the code’s adoption, making the discussion mostly moot. But when development returns, the potential benefits of incorporating safety-related design elements will need to be weighed not only against design and construction cost premiums but also against the loss of rentable space.

“I do not believe that we have a blank check,” declared Clark Manus, CEO of San Francisco-based Heller Manus Architects and the 2011 president of the American Institute of Architects. He added that he would like to see a thorough study of the value of post-Sept. 11 practices in the built environment and beyond—in new airport security measures, to name one example.

Manus’ comment underscores that the lessons learned in the years since Sept. 11, 2001, are still works in progress. Strategies for handling the complex challenges to come will continue to evolve. But no matter what the issue, the road ahead calls for innovation, a healthy skepticism about conventional wisdom and common sense.