Progress at the World Trade Center redevelopment, pictured here as of last month, has been hampered by delays. Christopher Ward, executive director of the
Port Authority of New York and New Jersey, said in July that the original completion dates will not be met. (Photo by Joe Woolhead)
“We’ve seen a massive dislocation of the capital markets, unprecedented in our lifetime,” he says. “It will take time for banks to recover
their capital and start lending again. When that happens, the stock
market will respond, and after six months of stock market recovery
the economy gets rolling again. By the time these buildings are ready
for occupation, we’ll see a vastly different market from what we see
today. When you have all those mass transit lines converging, and all
that retail, plus the eight-acre memorial park and the new PATH terminal—when all of that is in place, people will realize that it was worth
all the time, energy, frustration and money that went into it.”
Swig seems to concur. “If I were Larry I’d build now, finishing
when the economy’s good,” he says. “Fifteen million sf of office
space has been converted to residential Downtown, with more
coming. Add the 13 million sf lost on 9/11, and you have 22% of all
the office space in Lower Manhattan. Maybe economic times aren’t
perfect now, but businesses need to expand. The new buildings will
bring in new and growing tenants; the memorial will bring tourism.”
In a statement, Elizabeth Berger, president of the Alliance for
Downtown New York, concurs. “While there is still much work to
be done developing the World Trade Center site, the bigger story
is how Lower Manhattan has emerged as one of the most dynamic
and successful live/work communities in the world,” she says.
Marisa Manley, president of Commercial Tenant Real Estate Representation, says she’s not nearly so optimistic. The delays and the
budget issues surrounding the Ground Zero development, she says,
are negatively impacting all of Downtown.
“We’re seeing negative absorption,” she warns. “AIG’s assumption of 800,000 sf from Goldman Sachs at 180 Maiden Ln. was a
huge deal, but look at the other major Downtown leases lately. By the
fifth- or sixth-largest deal, you’re down to 10,000 sf. Where’s the demand for additional space?”
Manley says Downtown leasing at the moment consists mainly of
“renewals, consolidations and some expansions—but new tenants are
not coming in great numbers. And as Midtown slows, Downtown
may slow as well.”
Many banks, Manley points out, are predicting yet more writeoffs—
and more layoffs. Tenants are looking for bargains, but these have not
materialized yet since owners are hoping rental rates will stay level.
“Keep in mind that the market Downtown is stratified,” she adds.
“If a large bank puts 200,000 sf of class A space on the market, that
