Louis V. Simone is back at work. In the same building, at the same desk, looking through the same window where he saw the horrors of Sept. 11 unfold.

Simone, a branch manager at the freight company New Wave Transport Inc., was at work in his bright corner office on the third floor of 30 Vesey St. when the first of two jetliners crashed into the World Trade Center.

Debris started coming down, said Simone, who has a large window that looked diagonally across Church Street to the World Trade Center. We saw people jumping. It was a horrific sight.

Simone, of Forest Hills, and six co-workers had to move to the offices of an affiliate in New Jersey until windows shattered by the collapse of the trade center could be replaced and dust cleared from the century-old 18 floor office building.

New Wave Transport returned on Jan. 22 and now, through his new windows, Simone has a direct view of a hold and of cranes, and on the periphery, of tourists visiting Ground Zero. Despite the changed view and the fact that about half the offices in his building remain vacant, Simone is upbeat.

It s great to be back. Its home, Simone said of the office he has occupied for 14 years. Now we look at it as if the damage is done and the rebuilding stage is starting. It s nice to be here for the rebuilding.

New Wave is just one of the businesses returning to lower Manhattan six months after the terrorist attacks. Some businesses are even expanding, commercial property brokers said.

But even with office space cheaper and more plentiful than it was before Sept. 11, some in the real estate industry are not overly sanguine about prospects for a quick turnaround of a market that had begun deteriorating almost a year ago. The office vacancy rate downtown, 4.8 percent in the first quarter of 2001, has swelled to 10.5 percent despite the destruction of 12 million square feet at the World Trade Center and damage to another 20 million square feet in the surrounding area.

Average rents have dropped from $43.79 per square foot a year ago to $38.92 in February, according to Cushman & Wakefield Inc.

The Manhattan office market had been extremely tight, with the overall vacancy rate falling to a 20 year low of 5.1 percent at the end of 2000 and the rate for Class A space, full of amenities, at a mere 1.7 percent. Many landlords, taking advantage of the tight market, persuaded tenants to renew their leases early (this had the same impact as last fall s zero-percent auto financing had on car sales, which boosted sales short term but resulted in fewer this year). Then the dot-com collapse hit, and space-rich Wall Street firms, experiencing a downturn in their businesses due to slumping stock prices, decided to put their own excess space on the market.

The result: Downtown vacancies spiked quite the opposite of what had been expected immediately after the destruction of the trade center, because so much office space had been lost and some brokers said they expect the vacancy rate to climb as high as 17 percent this year before any recovery is felt.

Still, among commercial real estate brokers there is a sense of cautious optimism about lower Manhattan, which remains the second-largest central business district in the nation, smaller only than midtown. Brokers said leasing activity is picking up, most notably on the east side of the financial district, and some former World Trade Center retailers are looking for space along Broadway.

Tenants are starting to make deals, said Steve Berliner, executive director of the downtown office of commercial property broker Insignia/ESG. Downtown has made a great recovery. On Sept. 12 there was a realization that a lot of major tenants would relocate to midtown. In fact, very few have.

Insignia/ESG moved back to One Liberty Plaza, which is opposite Ground Zero, in January and Berliner, for one, is not bothered by the view from his window. Quite frankly, at this point, it s really a construction site. I have no issue working here and I overlook the 16-acre site.

The brokers optimism, viewed by some industry colleagues as attempts to drum up business in a lack-luster market, also may have been buoyed by a speech late last month to the Real Estate Board of New York by John Whitehead, chairman of the Lower Manhattan Development Corp. Whitehead, who calls himself Downtown s biggest cheerleader, said the emergency problems Downtown are being resolved and outlined plans for a memorial, performing arts center and possible new offices and residences rising on the former trade center site.

M. Myers Mermel, president of TenantWise.com, an online office brokerage that has been tracking the exodus of businesses from Lower Manhattan since the attack, now estimates that 55 percent of the businesses displace by the Sept. 11 attacks have indicated that they will return. Businesses that aren t returning have largely relocated to midtown, New Jersey and elsewhere.

Among the most prominent returnees is the big financial services company, Merrill Lynch, which occupied two buildings at the World Financial Center. In late October, it began moving 5,000 employees back to Building Four in the office complex that is part of Battery Park City. The building is owned jointly by Merrill Lynch and Toronto-based Brookfield Properties.

In recent weeks, another 1,000 workers began returning to Two World Financial Center, where Merrill Lynch leases the entire building, but the investment firm has decided to give up about 450,000sf for sublease in the building that overlooks the former trade center site, said spokeswoman Selena Morris.

Those Merrill Lynch employees who have returned are squeezed fairly tight, said Judy Mareiniss, who after being out of work at half pay for several months recently returned to her office.

Every bit of space is used. We ve turned closets and conference spaces into offices, said Mareiniss, who arranges meetings for Merrill.

Another big occupant of the World Financial Center, American Express Co., which previously said it would not return all its employees to Building Three in the complex, now is saying it will bring back 3,500 employees who were dispersed to New Jersey, Stamford, Conn., and other parts of Manhattan after the collapsing towers badly damaged its building. The move will take place next month, said spokeswoman Molly Faust.

One World Financial Center, a 40-story, 1.6million-square-foot tower, is ready for re-occupancy, Brookfield officials said, but as of last month, only a few tenants had returned. Most of the space in the building is leased by Dow Jones & Co. for The Wall Street Journal and other businesses and by Lehman Brothers, neither of which has returned.

Meanwhile, Barclays Capital Inc. which has 104,000 square feet at 222 Broadway, a building owned by Merrill Lynch, renewed its lease despite a decision to take new space last year in midtown.

We love it downtown, said Barclays spokeswoman Linda Wynns.

And brokers said a government agency is expected to sign a lease soon for two floors at 33 Maiden Lane, an office tower just three blocks east of Ground Zero.

In addition, brokers said they expect the big law firm Thatcher Proffit and Wood, which had 120,000 square feet in Two World Trade Center, to again take space downtown, possibly in one of Brookfield s buildings. Omer S.J. Jack Williams, managing partner, said no decision had been made about relocating from its current offices at 11 W. 42nd Street.

We re starting to see a fair amount of increase in the activity downtown, said Kenneth Krasnow, senior managing director of property broker Cushman & Wakefield.

To be sure, brokers said many of the leases being signed downtown are not for huge spaces, but are for offices of 10,000 square feet to 30,000 square feet.

Building sales are also going forward, among them United Federation of Teachers purchase of 50 Broadway, a 340,000 square foot building.

Also, brokers point to the purchase of J.P. Morgan Chase s 47-story skyscraper at 60 Wall St. by Deutsche Bank for its new headquarters.

Among other positive signs seen by brokers are speedy cleanup of the Ground Zero site, expected to be completed by the end of May, plans to reopen the No. 1 and No. 9 subway line stops downtown later this year and the PATH station sometime in 2003, and the reopening of downtown retailers, notably the Century 21 department store almost two weeks ago.

As the cleanup has gone along and efforts have been made by the city to reopen the streets, we ve had a dramatic change in the quality of life down there, said Brian Waterman, executive vice president of Newmark and Co. Real Estate.

Also, a national economic recovery could lead to an upturn in Wall Street s fortunes and, in turn, boost the downtown office market. Downtown is still very financial-services driven, Berliner said.

Brokers said the widening spread between office rents in midtown and lower Manhattan ultimately will force businesses to give serious consideration to renting downtown. At the end of 2001, direct asking rents in midtown averaged $62.70 per square foot; in downtown, the figure was $48.77, according to Cushman & Wakefield.

There s a fair amount of value players, looking around as companies are realizing that there s a significant spread between midtown and downtown, Krasnow said.

Landlords haven t dropped their asking rents but are making deals below those rates, Newmark s Waterman said. Merrill Lynch, for example, is asking $55 per square foot for its space in the World Financial Center but is looking to make deals in the mid-$40s, said Peter Riguardi, vice chairman of property broker Colliers ABR. Landlord concessions and government incentives, such as a federal program aimed at attracting or retaining businesses, could result in effective rents in the low to mid $30s, he said.

One broker who specializes in representing tenants, Phil Sprayregen, a senior vice president in C.B. Richard Ellis downtown office, takes a contrary view about downtown s prospects.

I think downtown is in some of the worst shape it s ever been in, he said. Sprayregen said places such as Jersey City are lower-priced alternatives for companies seeking back-office space, and that tenants won t consider lower Manhattan unless they can get rents in the high $20s or low $30s.

And there are downtown workers whose psyches remain fragile six months later. One 31-year-old analyst at Merrill Lynch, who declined to give his name, said he refuses to look out his office window, which faces Ground Zero, and is distressed by vendors hawking World Trade Center souvenirs. Nothing will ever be the same. There s a big hole in the city, he said.

Hot-dog vendor Nikolaos Goudelis, who has spent the past 25 years at the southwest corner of Church Street and Park Place, said he misses some of his old friends. Many of the buildings on his corner are still vacant. At nearby 100 Church St., a 20-story building, only two floors are occupied.

Goudelis, however, refuses to give up and thinks of his corner as home. Maybe I'll retire here, he said.