Rebuilding Downtown Update: LMDC Hires New Subcontractor for Deutsche Building Demolition

Lower Manhattan has been busy, as demolition is set to resume at the former Deutsche Bank building at 130 Liberty St. and a major tenant enters final negotiations for a lease renewal at the World Financial Center, according to media reports. The New York Times reports that after nearly five months of inactivity, the Lower Manhattan Development Corp. is close to restarting the demolition of the Deutsche Bank building. Work on the building stopped last August after two firefighters died while trying to bring a fire in the tower under control. According to government sources quoted in the report, a dispute between the development corporation and its construction manager, Bovis Lend Lease, has been resolved, shortly after the corporation threatened to fire Bovis. The development corporation declined to comment on the dispute. The development corporation also announced yesterday that it has approved the hiring of a new subcontractor, LVI Services, to strip and demolish the building. The news comes as the development corporation nears completion of the extensive interim safety measures that were undertaken after the August fire, devised in close consultation with various federal, state and city agencies. “Delays are a fact of life, and I’m glad to see that the Lower Manhattan Development Corp. is tackling the issue at hand instead of all the bureaucracy and finger-pointing,” Richard Warshauer, senior managing director at GVA Williams, told CPN today. “This demolition will be helpful in boosting morale, if nothing else.”Post-fire work included the removal of all previously-required plywood barriers and hatches that previously separated the floors of the building, the construction of two fire-rate stairwells through the 20th floor; the resealing of the building; and temporary shoring of the area damaged by the fire. Since August, the development corporation has been working closely with the Environmental Protection Agency, the New York State Department of Labor, Department of Buildings, Fire Department of New York, Department of Environmental Protection and the Office of Emergency Management to make all necessary adjustments and clarifications to the deconstruction and implementation plan to further protect responders, workers and area residents. No timeline on abatement and demolition was given, but a spokesperson for the development corporation told CPN that work will begin soon. However, the Times article noted that the task could take another year, and further delays could jeopardize other work at the World Trade Center site and a deal to turn over the Deutsche Bank property to JPMorgan Chase, which has an agreement with the Port Authority if New York and New Jersey to build a 42-story headquarters on the site. Under the terms of the deal, the Port Authority is to deliver the land to JPMorgan by September 2008. Additionally, the report said delays may also affect plans to construct ramps to the World Trade Center site, which are needed to complete construction of three office towers on the site. “There are things that aren’t proceeding and hopes aren’t being met,” Warshauer said. “But hopefully, we’ll see positive signs.”Also, the Wall Street Journal reported yesterday that Merrill Lynch & Co. is in final negotiations to renew its headquarters lease in the World Financial Center, after published reports said that the company was negotiating to building a new office tower at the site of Hotel Pennsylvania in Midtown. The report noted that the five-year renewal lease with landlord Brookfield Properties Corp. has not been signed and the deal can still fall apart. Brookfield declined to comment on the lease negotiations. “Merrill Lynch is a pillar of American finance,” Warshauer said. “If this indeed correct, which I think it is, then it’s very positive.”The news follows an already eventful week for Lower Manhattan. On Monday, CPN reported that the office building at 25 Beaver St. will remain home to New York’s Department of Insurance, Division of Housing and Community Renewal, Department of Lottery and Office of Court Administration, which signed lease renewals totaling 500,000 square feet. Additionally, the Port Authority and The Westfield Group announced a joint venture to develop and operate 488,000 square feet of retail at the World Trade Center site, a project totaling $1.45 billion. “Downtown is a vital market, which most people don’t seem to understand,” Warshauer said. “In the third quarter, we had more than a million square feet in positive absorption. It’s very robust.”And robust it is. The overall fourth quarter direct vacancy rate for Downtown office space is 6.2 percent, according to Cushman & Wakefield Inc. Average rental rates are $56.03 per square foot for Class A product, $45.89 per square foot for Class B product, and $40.14 per square foot for Class C product.