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‘We Are Doing the Right Thing’

The CEO of TenantWise keeps his office downtown, but finds it’s not easy persuading others to remain there

NEWSWEEK WEB EXCLUSIVE

September 03, 2002

One Year Later — M. Myers Mermel lives and works just blocks from the World Trade Center site, but he didn’t even consider leaving when terrorists attacked his neighborhood last September. In fact, Mermel was back at his desk the morning after the attacks—and would put in some of his longest days ever over the following weeks.

HE IS THE CHIEF EXECUTIVE of TenantWise, a real-estate consulting company that specializes in helping businesses find office space. After the attacks, his company provided some of that aid free of charge as he helped the dozens of downtown businesses whose offices were damaged or destroyed find new space. Despite the availability of nearby office space downtown, however, he found that the majority of companies whose offices were destroyed opted instead to move to midtown Manhattan or to New Jersey—even though it often cost them substantially more to do so. Tenants in one third of the damaged office space also relocated. TenantWise tracked their movements and has now published six special reports on the rebuilding of the downtown area since the attacks.
Mermel says he’s noticed some disturbing trends, including the discovery that only about 53 percent of the approximately 138,000 jobs in downtown New York affected by the attacks have returned to the area—that, despite lower rents and federal aid incentives. Nearly $131 million in federal grants have been allocated to 40 companies who made commitments to stay in Lower Manhattan for at least seven years, bringing with them about 34,000 jobs. Yet, while commitments from high-profile companies like American Express and Dow Jones have been widely-publicized, Mermel says the effects of their return has been diluted by the exodus of many smaller companies. NEWSWEEK’s Jennifer Barrett spoke with Mermel, whose company has been hired as a resettlement adviser to New York’s Empire State Development Corporation, about his decision to remain downtown—and what it will take to bring other businesses back there as well.

You’ve written six reports about the impact of the September 11 attack on the affected tenants in the WTC buildings and surrounding properties and about the overall downtown office market. What have you learned?

The reports came out of our effort to track these companies and help them to get resettled. It was so catastrophic that the real-estate industry wasn’t prepared to respond quickly. We had a tremendous surge in traffic on our Web site as people were trying to find space quickly. Our sole aim was to try and inform these companies. But then as we looked at the patterns that started to emerge, it was pretty striking.

What patterns did you notice?
Thirteen million square feet of office space was destroyed. Only companies using 11 percent of those square feet decided to stay downtown, even though the space is a lot cheaper and it is available down there. Twenty-five percent of those in damaged properties decided to leave—a full quarter—and these are long-term decisions. Many paid double to move to New Jersey or to midtown. [Rent] is usually the second-largest expense after payroll, and we’re in a recession. Companies are supposed to be cutting back but here they’re paying double to move. It was that bad. One executive told me one of his partners broke down in tears at the thought of staying. It was emotional. People identified the place with an event—they identified it as a place of terror. They felt lower Manhattan was inextricably linked with the disaster.

Has that changed much with time?
The emotional issues are fading, but there are concerns about environmental issues, and about the rebuilding of transportation and infrastructure downtown. There has been a lot of recommitment away from Manhattan. The long-term fallout from this is as bad as we thought, or worse.

What will it take to bring all those businesses back—and to make sure they stay?
It’s not enough to just rebuild the World Trade Center. Obviously, it doesn’t matter if they put in a bright, shiny apple if the rest of the tree is dead. They need to keep the integrity of the business district. There hasn’t really been a coordinated analysis of the area. The trick is not to push the businesses back but to build something to pull them back. There hasn’t been much thought about what will pull them back. There have to be some novel and exciting plans on how to make lower Manhattan a better business district, period—not just the area that was destroyed, but a focus on improving the entire area.

Any specific suggestions?
Well, 81 percent of the affected companies were finance companies and they are also the most likely to return to the area. Just 13 of those financial companies accounted for more than half the jobs that left there. There seems to be some pervasive sense that big companies are bad, but these big companies employ a lot of people and they pay 11 different types of taxes. We believe the state should move aggressively to make larger grants to bring these large companies back in the future, as well as building more Class A [prime office] space to replace the Class B [real estate that is less expensive because of age, infrastructure, a lack of amenities or other reasons] space. That will attract new companies in the future.

Isn’t it a little late to try and bring some of the businesses back that have already signed leases somewhere else?
It’s not too late because you are looking at forward commitments on the companies’ behalf for space that will be built 8 to 10 to 12 years out. If there is a commitment to improve downtown infrastructure and transportation, which would allow commuting to Connecticut and New Jersey and other suburbs, that will draw tenants back. In the short-term, we’ll need to see continued incentive stabilization by the state and federal government to maintain the nation’s financial capital.

What is it like for you personally these days, living and working so close to Ground Zero?
It feels like we are all just holding on. We are doing the right thing by being here, but we’re holding on. We’re fighting the good fight, but there are no high-fives or big grins or easy days.

Your office is located on Wall Street, just a few blocks from the World Trade Center. What do you remember from September 11?
We were as shocked as everyone was. The dust cloud was all around us—we couldn’t see anything. We weren’t sure what had happened initially. We waited a couple hours until the sun came through the dust and we could see our way out. It seemed like we should do something, but no one knew what to do. We have about 10 employees and a number of them live in midtown and wanted to be home so I walked with them for two hours up along the East River. Then I actually went back downtown because I live two blocks away from Wall Street.

Were you able to get back to your office?
I was back in the office at 8 a.m. on Sept. 12.

Why so soon?
Just because I knew that we had information that would allow us to contact these displaced companies and that all these displaced companies needed new space immediately to continue their business. I stayed down there, though the Army started evacuating the building for fear One Liberty Plaza might fall on us. I think I was the only one—or one of the only ones—still in that building. I had to have faith that the buildings would stand and things would be fine. I didn’t think that there was necessarily any safer place to run to then. And I wanted to stay focused on helping these companies resettle. I had thought to volunteer on the pile but then it dawned on me that I am not a big guy and I can’t run machinery, but I can work the phones and I know the real estate market and maybe the Lord wanted me to work on that side instead. So that’s what I did. By next Monday, everybody had come back to the office.

Yours must have been one of the few businesses operating down there that week. Wasn’t that difficult?
There was so much grief and so much loss that it was good to work. We wanted to volunteer our time and our efforts and our knowledge to help these companies get resettled. For some companies, of course, we didn’t charge them anything but just wanted to help them set up shop and let them know where they could continue to do business. I don’t think everybody realized just how catastrophic it would be for the companies that were displaced. When we first went back, we pulled two or three all-nighters getting as much information up and out as possible and I remember crawling under my desk at about 5:30 a.m. to sleep for an hour and a half. And I was so pleased that I could sleep under my desk because I thought of all those people who didn’t get the chance to wake up that morning—and all those loved ones who weren’t coming home again. And I was pleased to have the opportunity to be able to do something. I was just glad to be alive.
Now in the office, we don’t like to talk about it. Some things are just so bad you don’t want to bring it up again. Not that this compares to a war. There was no personal sacrifice, we were just bystanders. But there was so much sacrifice made that we were just in awe of it.

Weren’t you concerned for your safety?
No, but I have to tell you that those couple weeks after [the attacks], staying at my apartment late at night, it was very unsettling. Many times I had to pray—it was just too heavy. The quietness of the night was too heavy. Sometimes, you would hear the jets going overhead—the National Guard—and at first it would startle you. You’d try to sleep and then you’d get up and pray. It was really hard.

Why stay downtown?
It’s my home. My father’s people got off the boat at Ellis Island at the turn of the century—my mother’s people got off the boat 300 years before. I have ancestors buried down there. I feel a very special connection to that piece of land. I grew up in Virginia but I’ve been in New York since 1984—forever.

How optimistic are you about the future of lower Manhattan from a business perspective?
It’s an open question. There has to be continued state and federal involvement to fix what was a broken market even before. I think restoring the area as a financial capital, as it was, is an economic and political imperative not only for the region but also for the country. This is not just any city we’re talking about. This is New York.

© 2002 Newsweek, Inc.
 

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