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Deals by Displaced Firms Fuel NY Leasing Market


September 28, 2001

The New York real estate market has bounced back from a slump in demand as companies displaced by the collapse of the World Trade Center rush to grab available office space to restart their businesses.

Since the Sept. 11 attack about 7 million square feet of space has been leased, compared with 9.4 million in the first eight months of the year, property brokerage firm Cushman & Wakefield reported. Landlords are getting 90 percent of asking rents, up from as little as 60 percent, said Myers Mermel, chief executive of TenantWise, an online property broker.

The leasing has brought relief to a market where vacancy rates doubled to 6.4 percent at the end of the second quarter from a year earlier, and exceeded 12 percent in some areas as Internet and other computer-related companies cut jobs while U.S. economic growth fell to its slowest pace in eight years.

"The power has switched back to landlords," Mermel said. Brokers expect the pace of leasing activity to taper off as many of the more than 650 tenants displaced by the attack complete temporary or permanent arrangements to relocate.

The collapse of the Trade Center towers, located at Manhattan's southern tip, wiped out 13.4 million square feet of space and damaged 15.7 million square feet. That's more than the central business districts of Miami or Atlanta.

In one of the latest deals, the Securities and Exchange Commission, which had its regional headquarters in the destroyed 7 World Trade Center, agreed Wednesday to lease 140,000 square feet in the landmark Woolworth Building in lower Manhattan.

Of the leases signed, 64 percent have been on space in Manhattan, with the rest in New Jersey, New York's Westchester County and Connecticut's Fairfield County, according to Cushman & Wakefield. About half the leases have been for terms less than five years, O'Keefe said.

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