Low Rent for All
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
It’s nice to see Larry Silverstein’s 7 World Trade Center building filling up, but it’s a shame that taxpayers’ wallets are being emptied to lure tenants into the new office tower. American Express Financial Advisors is close to signing a deal with Mr. Silverstein to become the first tenant in the building, according to Crain’s New York Business. How will beleaguered Empire State taxpayers lose out in the transaction? Let us count the ways:
Taxpayers will subsidize rent on the space at a rate of $3.80 a square foot for the first 750,000 square feet that are leased at the 1.7 million-square-foot space. Mr. Silverstein is matching that subsidy, for a total reduction of $7.60. And there’s the electricity supplied by the state-owned New York Power Authority at rates significantly lower than those charged by Con Edison.
At least tax cuts are part of the equation, too. Under the “Marshall Plan” for Lower Manhattan pushed through by Assembly Speaker Sheldon Silver, tenants at ground zero are permanently exempt from the commercial rent tax. Businesses moving to the World Trade Center site will pay no sales tax on office furniture purchases. They will not pay sales tax on the costs of customizing their office space once they relocate, a benefit that will be shared by businesses setting up shop elsewhere in Lower Manhattan. There are enough other credits and exemptions to fill a broadsheet page.
By one count, the net result of all this interference is to reduce the effective rent at 7 World Trade Center to around $35 a square foot from the $50-a-square-foot sticker price. By way of comparison, average rents in that part of town hover between $25 and $35.
Kudos to Mr. Silverstein for playing the government handout game as effectively as any other savvy entrepreneur would. As for Mr. Silver — and Senator Bruno, Governor Pataki, and Mayor Bloomberg, all of whom abetted this “Marshall Plan” – it’s nice to see they have discovered the magic stimulus of tax-cutting. It would be nice to extend the benefit to all New Yorkers and not just to those who set up offices in favored neighborhoods.
