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Survey Finds Displaced Split on Remaining in Manhattan

By Susan L. Harper

October 03, 2001

MANY TENANTS from the destroyed World Trade Center buildings and surrounding damaged properties have relocated within New York, according to Sept. 21st and Oct. 1st surveys conducted by TenantWise.com, an on-line real estate services and information firm. A number of tenants within the 14 damaged properties have also indicated that that they will return to their former downtown offices once repairs have been completed. However, many of the largest tenants from the destroyed and damaged properties-accounting for the majority of the leasable square footage - have made long-term plans to relocate outside of lower Manhattan.

"While it is clear that companies are supportive of the State of New York in its time of crisis, it is also clear that many are not making plans now to return to lower Manhattan," the Oct. 1st report concluded.

TenantWise.com surveyed 75 of the largest tenants from the destroyed buildings. The online real estate services firm found that 40 of these largest tenants, representing 82 percent of the square footage of those surveyed have made plans to relocate outside of lower Manhattan. Also, 11 of the largest tenants in damaged properties surrounding the World Trade Center - representing 44 percent of the total square footage of the damaged properties- are also relocating outside of lower Manhattan.

These findings, according to M. Myers Mermel, chief executive officer of TenantWise.com, were achieved through interviews directly with tenants or through their landlords and brokers.

"Many of the companies have chosen to pay higher rents in Midtown Manhattan," said Mr. Mermel.

TenantWise.com also found that 31 of the total 113 companies located in damaged properties, representing 17 percent of square footage in damaged properties stated their intention to return to lower Manhattan. However, 71 companies representing 39 percent of the square footage within damaged properties, according to the Oct. 1st report, have not specified whether they will return to lower Manhattan once the repairs are completed.

The report included speculations that during this period of recovery many of the companies "may be focusing on the grieving and healing process and getting settled into temporary space." Further, the authors cautioned that some of "these destinations indicate deals in progress and may be reversed."

"It is possible for companies to return to lower Manhattan as sufficient Class A and Cass B space exists to house them," Mr. Mermel confirmed.

Some of the largest financial services tenants once housed in now damaged buildings, including American Express, Merrill Lynch and Lehman Brothers chose to relocate to New Jersey and Connecticut in the wake of the attacks, signing long-term leases and taking 10,500 jobs out of state with them, estimated TenantWise.com.

Mr. Mermel pointed out, however, that it may be possible for these companies to sublease their long-term, out-of-state spaces if they decided to move back to New York.

One out-of-state real estate developer commented this way on some New York City companies' decision to relocate out of state: Even if I had the space, I would not offer it to a New York City company. There is adequate space in New York City and State to house displaced tenants. Many corporations have benefited tremendously from New York during the good times. They should stick with New York during these challenging times as well."

Copyright 2001 ALM Properties, Inc. All rights reserved.

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