One World Observatory, the viewing deck at Manhattan’s 1 World Trade Center, opens Friday, giving tourists New York vistas that were lost on 9/11 and helping to cover the cost of the most expensive building ever.
The deck’s operators expect to pay $875 million over the next 15 years to the tower’s owners. That amount — an estimate of the rent to be generated from events, ticket sales, souvenirs and other moneymaking efforts — represents about 27 percent of the $3.3 billion it cost to construct the Western Hemisphere’s tallest building, at 1,776 feet (541 meters).
The observatory, about 1,250 feet above West Street, features viewing floors on the tower’s 100th to 102nd stories, and three dining options. Visitors stepping into the elevators, called Sky Pods, for the 60-second ride to the top will be enveloped in a virtual Manhattan skyline as it evolved over 500 years. The deck, operated by New York-based Legends Hospitality LLC, will produce income for the skyscraper, whose offices remain about 36 percent unleased.
“We expect it to be an attraction that people pursue on their first day in New York,” said Dave Checketts, Legends’ chairman and chief executive officer. “We expect over half of the visitors to be from outside this country. And we expect it will generate significant enough revenue to reward us for our investment.”
Legends rents the space from the Port Authority of New York and New Jersey, which built and owns the tower, and the Durst Organization, the agency’s equity partner.
The observatory’s revenue will be “almost totally” derived from ticket sales — standard adult admission is $32 a person, $15 more if you want a tablet computer to help orient you — but there will also be weddings, bar and bat mitzvahs, graduation parties “and even a board meeting of a multinational company,” Checketts said. He declined to say how much of the money Legends expects to keep, citing the company’s closely held status.
Legends, a partnership that includes the New York Yankees, the Dallas Cowboys and Goldman Sachs Group Inc., expects 3 million to 4 million annual visitors. As of last week, 350,000 tickets had been sold, according to the company.
The skyscraper was the world’s costliest to build, according to Emporis, a website that tracks construction data.
The original World Trade Center, destroyed by terrorists on Sept. 11, 2001, had an observation deck on the 107th floor of the south tower. Since the attack and before One World Observatory’s arrival, visitors wanting to see New York from the sky were divided between the Empire State Building and the Top of the Rock, an indoor-outdoor perch near the summit of 30 Rockefeller Plaza.
The Empire State Building’s two decks welcomed 4.28 million visitors in 2014 and generated $82.5 million of income on $111.5 million of revenue, according to an analysis by research firm Green Street Advisors LLC. Profit from the 86th and 102nd-floor observatories has jumped 55 percent since 2009, the data show.
“We are an international icon of New York City, located in the heart of Midtown,” said Hugh Burns, a spokesman for Empire State Realty Trust, the company that owns the tower and went public in late 2013. “Our performance has improved steadily through the years, including the opening of Top of the Rock, the 9/11 Memorial and the 9/11 Museum, through currency and economic cycle fluctuations. We like our competitive position.”
The observatories’ net income in 2014 was about 42 percent more than the $58.3 million One World is expected to generate for that tower’s landlords annually.
Tishman Speyer, which controls Rockefeller Center, said through spokeswoman Suzi Halpin that it sends “a warm welcome to One World Observatory.” The closely held company declined to provide financial data for Top of the Rock, which has about 3 million visitors a year, she said.
The basic adult ticket for Top of the Rock costs $30. At the Empire State Building, adults pay $32 for a “main deck only” ticket to the 86th floor.
Green Street Advisors estimates that Empire State and 30 Rock split the market 62 percent to 38 percent.
“Empire State observatory income will be under pressure and experience some declines this year and next” because of the new competition, said Jed Reagan, an analyst at Green Street. “Long-term though, I think the business holds up just fine and Empire State will be able to win an outsized share of New York observatory visitors.”
–With assistance from Kelly Belknap in New York.
This article was written by David M. Levitt and David Gura from Bloomberg and was legally licensed through the NewsCred publisher network.