Freedom Tower: Risk Premium or State-Capitalism or Both
Everything is connected
The reconstruction point for ground zero is getting close. It should be noted that the going rate in Manhattan for good commercial real-estate is $70 per sq ft or more, yet space in Freedom Tower (to be the tallest building on the island) is only going to be $59 per. This is because the city-state and nation-state have their distorting fingers in the pie. But then again the World Trade Center would not have been destroyed if we minded our own business and didnt pick and chose political winners (and losers) to support in other countries not our own. Free-association amongst people and nations: good. Meddling in sovereign political process: bad.
What does this price differential connotate? It seems like a bribe to get more people to sign-up leases. It could also be that the lower price represents the higher chance that the buildings will be a target. It also shows of course that the value of the building and its rents is being set externally to some internally rational process which choses distribution in economic democracy instead of political connection.
Half of the leases to date are signed by government agencies (which makes some sense as government makes up just less than 50% of our economy if transfer payments are included). And Kudos to Port Authority chief Anthony Coscia for saying that he wont move his employees there despite the lower rents (he is worried about the emotional impact of his people there who were evacuated and lost their friends. But...is this right too?).
I dont know the solution of the government broke-it but who's going to fix it paradox but it seems that not charging the going rate sets the Tower apart and is not as unifying as it might be. Plus it means that the space wont be used as efficiently as it could be (eg those that get a break on rents will then not have to make as much return on their investment and therefore their space will be under-utilized). But Inchallah it will be both beautiful and safe.
The reconstruction point for ground zero is getting close. It should be noted that the going rate in Manhattan for good commercial real-estate is $70 per sq ft or more, yet space in Freedom Tower (to be the tallest building on the island) is only going to be $59 per. This is because the city-state and nation-state have their distorting fingers in the pie. But then again the World Trade Center would not have been destroyed if we minded our own business and didnt pick and chose political winners (and losers) to support in other countries not our own. Free-association amongst people and nations: good. Meddling in sovereign political process: bad.
What does this price differential connotate? It seems like a bribe to get more people to sign-up leases. It could also be that the lower price represents the higher chance that the buildings will be a target. It also shows of course that the value of the building and its rents is being set externally to some internally rational process which choses distribution in economic democracy instead of political connection.
Half of the leases to date are signed by government agencies (which makes some sense as government makes up just less than 50% of our economy if transfer payments are included). And Kudos to Port Authority chief Anthony Coscia for saying that he wont move his employees there despite the lower rents (he is worried about the emotional impact of his people there who were evacuated and lost their friends. But...is this right too?).
I dont know the solution of the government broke-it but who's going to fix it paradox but it seems that not charging the going rate sets the Tower apart and is not as unifying as it might be. Plus it means that the space wont be used as efficiently as it could be (eg those that get a break on rents will then not have to make as much return on their investment and therefore their space will be under-utilized). But Inchallah it will be both beautiful and safe.
posted by Cameron Weber at 3:36 PM
