Lower Manhattan's property market, suffering from an exodus of financial firms in the wake of the Sept. 11 terrorist attacks, may be poised for recovery now that a development plan has been chosen, some investors said.
Authorities overseeing the rebuilding of the 6.47 hectare World Trade Center site yesterday selected a design featuring a spire 541m high with indoor gardens and glass and steel office towers. Also on tap are a new subway, bus and commuter rail transportation center, a performing arts venue and museum.
Businesses may have more confidence to expand in the area with a development plan in place that also addresses the area's transportation problems, brokers said. One reason for optimism is that the area's office vacancy rate, after doubling in the wake of the terrorist attacks, has held steady at about 14.5 percent for the past 12 months, signaling the exodus is over.
"I fervently believe that downtown Manhattan will come back and that there are unique opportunities in downtown today," said Jerry Speyer, chairman of Tishman Speyer Properties LP, one of New York's largest landlords and owner of Rockefeller Center.
Speyer, in a speech this week to a group of German real estate investors, said they "shouldn't be surprised" if he soon bought some 92,903m2 of space below Canal Street. The amount is one-10th of what was in the Trade Center complex.
Sept. 11 accelerated a decades-long trend of securities businesses moving from downtown to midtown, New Jersey and New York's Westchester County. Lehman Brothers Holdings Inc, Cantor Fitzgerald LP, Salomon Smith Barney Inc, Morgan Stanley and others moved employees out of the area.
* The area's office vacancy rate has held steady at 14.5 percent for the last year.
* Manhattan lost 6,900 jobs in the financial service industry in the first 11 months of last year.
* The NASDAQ Stock Market said it will keep its headquarters downtown, across from the Trade Center site, after considering a move to Times Square.
More recently, companies made decisions to stay, lured in part by federal, state and city incentives. CoreNet Global, an association of corporate real estate executives, said this week 58 percent of respondents to a survey that occupied space that was damaged on Sept. 11 would consider returning.
"The media has made much of the fact that some companies have left downtown but has written virtually nothing about the companies that have agreed to stay downtown and are growing downtown," Speyer said.
Last month, the NASDAQ Stock Market said it will keep its headquarters downtown, across from the Trade Center site, after considering a move to Times Square. In November, law firm Thacher Proffitt & Wood, displaced from its World Trade Center offices, signed a 15-year lease in the adjacent World Financial Center, owned by Brookfield Properties Corp.
Government grants of as much as US$12,000 to people who buy or rent an apartment downtown has helped shore up the residential market. Sales of downtown lofts rose to 154 units in the fourth quarter from 59 a year earlier, said Jonathan Miller, president of Miller Samuel Inc, a Manhattan appraisal firm.
"People didn't move out of their homes," said Patricia Burnham, president of residential brokerage P.S. Burnham Inc.
Some real estate executives said government officials are focusing too much on billion-dollar transportation projects for the area, including a rail connection to JFK International Airport from downtown that would require a new tunnel under the East The Lower Manhattan Development Corp, the agency overseeing the rebuilding, should instead concentrate on making getting around the area easier for workers and residents, said Bruce Mosler, president of US operations at New York-based property broker Cushman & Wakefield.
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