Lower Manhattan’s Corporate Draw
- Oct 10, 2011
Lower Manhattan? Downtown? Whatever you prefer to call it, the south end of New York’s most famous borough has come roaring back. Through a decade that started with the worst terrorist attack ever on U.S. soil and ended with an economic storm of historic proportions, the district of New York has become one of the fastest-growing areas of the country, if not the world. And that progress shows no signs of stopping, thanks to the rebuilding of the World Trade Center site, including 8.8 million square feet in four office towers.
According to the Alliance for Downtown New York, Lower Manhattan lost 754 businesses in the two years after the 9/11 attacks. While it took time for economic growth to return, the district has added 307 new companies since 2005 and now boasts 8,428 companies, 130 more than there were on Sept. 11, 2001.
“Unlike past recoveries, Downtown held its own,” Ken McCarthy, senior economist at Cushman & Wakefield Inc., told CPE. As Cushman & Wakefield continues its quest for tenants in the to-be-completed 1 World Trade Center tower, its trophy signing of Condé Nast represents a major draw for the area. The publisher, which inked a deal for 1 million square feet of space in late May 2011, will take occupancy in late 2013 or early 2014.
“I think Condé Nast is going to have a huge impact,” said Jeremy Moss, senior vice president & director of leasing for Silverstein Partners. “You can look back at what Condé did for the revitalization of Times Square.”
Condé Nast, which moved into 650,000 square feet of space at 4 Times Square in 1999, made the change because it “wanted to solidify its long-term occupancy in a way that was right for the company,” Gregory Tosko, vice chairman with CB Richard Ellis Inc.’s consulting services group, told CPE. The publisher wanted more space in a more efficient setting than it had in its current headquarters. “We had to have space that would allow us to put in technology that we know will be changing,” said Bob Bennis, managing director of real estate for Condé Nast. Several decades of development have also made Times Square considerably more crowded and therefore “a little more difficult to get around in,” he said.
Transportation, too, played a major role in the decision to relocate Downtown. Bennis explained that the rail network serving the Downtown area will make the World Trade Center accessible to employees living throughout the region. And the transit hub being constructed by the Port Authority of New York and New Jersey “will be the Grand Central Station of the next century,” he predicted.
But young professionals are also moving to Lower Manhattan, noted Robert Constable, executive director of Cushman & Wakefield. “If you’re just out of college or business school and you’re being recruited (by a Lower Manhattan firm), you’re looking at Downtown.”
Asking rents also help. “Class A rents are now $69 per square foot in Midtown,” McCarthy said. “In Downtown, they’re $44. That’s a significant difference.”
“The demise of downtown was vastly overrated,” McCarthy said. “It’s still the fourth-largest office market in the country.”