Saturday, September 10, 2011

Downtown’s boom

Don’t let the critics kill growth

By Steve Cuozzo

As office towers like 1 WTC rise, they allow older buildings to be converted to apartments.
New Yorkers are justifiably celebrating the city’s recovery from 9/11, even as we mourn the loss of 2,752 lives. Downtown not only survived as the nation’s fourth-largest business district, but blossomed into the city’s fastest-growing residential neighborhood, full of new hotels, stores and parks.

But don’t expect the defeatists to give up. The years ahead will surely see renewed howling over a “glut” of office space Downtown and criticism of subsidies to promote reconstruction.

Make no mistake: The inventory is going to swell. A new report from real-estate brokerage Jones Lang LaSalle predicts that today’s 9.2 percent office-vacancy rate in Lower Manhattan will soon soar -- temporarily -- to more than 15 percent.

Gov. Cuomo, Mayor Bloomberg, developer Larry Silverstein and the Port Authority must be prepared to shrug off the inevitable whining and press on with finishing the new World Trade Center.

Nothing will shame the false prophets of doom -- who insisted for years that, without a massive public-works program to create “affordable” housing or biotech farms, Lower Manhattan would end up abandoned.

In fact, the clear basis for the area’s renaissance was spelled out on this page on May 2, 2002, when I wrote that the district’s inherent qualities would carry the day and that “Downtown will rise again.” The assets included its iconic location, nearly crime-free streets, a vast and deep talent pool, indispensable landmarks, one of the world’s best fiber-optic networks and unparalleled subway connections.

Today, 1 and 4 WTC are rising, but Towers 2 and 3 -- essential to replenish the losses of 9/11 with sufficient state-of-the-art office facilities -- won’t rise above foundations anytime soon. Count on a renewed campaign to stall their advance.

With millions of square feet of office space coming online, some commentators aren’t waiting to scream that the sky is falling: One has risibly declared 1 WTC a “white elephant,” despite Condé Nast’s moving there.

Yet that Jones Lang LaSalle report is anything but defeatist. It says any short-term Downtown office surplus will soon be absorbed. (No surprise: Every new office address that opened empty since the 1980s has filled up soon enough.)

And, since the new WTC towers are so superior to all but a handful elsewhere, companies will pay for their state-of-the-art features. Jones Lang even forecasts that the gap in rents between Midtown and historically cheaper Downtown may disappear.

There’s a hidden bonus to new office space: It will make the area’s antiquated older addresses even more obsolete. And that will encourage more landlords to convert offices to apartments -- a phenomenon that’s already transformed Downtown.

The metamorphosis is epic in scale: From 2001 to 2006, the Downtown Alliance reports, 15 million square feet of offices below Chambers Street were converted to residences. (To appreciate the magnitude, think of 15 giant office towers like the ones on Park Avenue uptown.)

Among the transformed sites was 10 Hanover Square, where Goldman Sachs gave up its lease in 2004. The building’s owner rid itself of more than 500,000 square feet of second-class office space and Downtown gained nearly 500 rental apartments.

Many attribute the residential boom to subsidies, including Liberty Bonds and the city’s 421-G tax-abatement program. They certainly helped; so did purchase prices and rents slightly lower than uptown. But the main driver was that people wanted to live in virtually crime-free Downtown, despite anxiety over a possible new terrorist attack. All that was missing were places to call home.

Landlords grasped that commercial structures built in the pre-digital age couldn’t compete with newer ones. Today, many more conversions are coming, including at the former AIG headquarters at 70 Pine St. Other owners are assessing their options as new towers make the weakest older buildings irrelevant.

The “skeptics” nearly succeeded in derailing any commercial rebuilding at the WTC. They failed, but the job is far from finished. Those who believe in Downtown must be prepared to prevail anew over those who lie about a “glut” -- and their media enablers.

2 comments:

  1. DROP DEAD UNITY TEAM !

    ReplyDelete
  2. Innappropriate title for a 9-11 story.

    ReplyDelete

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