Hard-hit area loses thousands of jobs as
major companies flee
By ERIC HERMAN
Daily News Business Writer
October 17, 2001
Since the Sept. 11 terrorist attack, many businesses forced from their
offices have vowed to remain in Manhattan — but not downtown.
Statistics show the majority of displaced firms are moving to midtown,
cutting longstanding ties with lower Manhattan and taking thousands of jobs
The area has lost an estimated 100,000 jobs, including the 50,000 positions
at the World Trade Center, according to Carl Weisbrod, president of the
Alliance for Downtown New York.
Some of those jobs will return, he said. But that depends on companies
returning. Since the attack, 39 displaced firms have signed leases outside
downtown, while only eight have done downtown deals, according to real
estate company Cushman & Wakefield.
Real estate firm Julien J. Studley estimated that 9% of large firms
displaced by the attack have elected to stay downtown and that 65% of the
displaced companies have moved to midtown.
"The long-term outlook is very, very good. In the long term, downtown will
get rebuilt," Weisbrod said, "In the short term, we face some serious
The exodus comes after a period of high hopes for the area. Downtown had
rebounded from its deep slump in the early '90s, when commercial tenants
fled to midtown. But gradually, thanks to the city's booming economy, an
incentive program and the transformation of many commercial buildings into
residential, the area came back.
By last year, downtown commercial rents were hitting all-times highs. Real
estate moguls tried to outbid one another for control of the Trade Center,
and brokers marveled at the possibility of a 1.3 million-square-foot office
tower attached to the New York Stock Exchange's new trading facility.
A Raft of Problems
But today, downtown's problems range from crushed subway tunnels and blocked
transportation to employees' anguished memories of Sept. 11. The attack
removed 25.8 million square feet of office space from downtown, nearly 24%
of the supply, according to Cushman & Wakefield. Several companies reported
moving to midtown because the space they needed was not available downtown.
"Lower Manhattan just became that much more of a difficult location to
operate in," said Jerold Kayden, professor of urban planning at Harvard
University and author of "Privately Owned Public Space: The New York City
The departing companies include the biggest names in financial services —
the backbone of the city's economy. American Express moved 5,000 employees
from the World Financial Center to Parsippany and Short Hills, N.J., and to
Stamford, Conn. Empire Blue Cross/Blue Shield, formerly in 1 World Trade
Center, has moved 1,900 employees to Melville, L.I., and other locations for
the time being. The company just signed a lease in midtown and is exploring
a deal at MetroTech in Brooklyn.
Lehman Brothers, which had 5,000 employees and a long-term financial stake
in the damaged World Financial Center, showed signs of leaving downtown for
good when it leased much of 399 Park Ave. in midtown and bought 745 Seventh
Ave., a million-square-foot office building near Times Square.
"Lehman's announcement to permanently move its headquarters to midtown is
sort of the first shot across the bow for the downtown marketplace," said
Matthew Barlow, executive managing director at Julien J. Studley.
Companies have not abandoned Manhattan, as many feared would happen in the
days following the attack. Less than 20% of leases signed since Sept. 11 are
for office space outside Manhattan, according to Cushman & Wakefield.
"The clear winner is midtown," said Myers Mermel, chief executive officer
of real estate firm Tenantwise.
Union Square Move
Fred Alger Management, a mutual fund company that was on the 93rd floor of 1
World Trade Center, will soon move to a building near Union Square because
the location is easily accessible from the PATH train, chief financial
officer Greg Duch said.
"We don't know how long that downtown PATH [train] is going to be out," he
Real estate experts said government action is urgently needed to stanch the
flow of jobs from downtown.
Ross Moskowitz, a lawyer with Stroock & Stroock & Lavan who once worked for
the city Economic Development Corp., said tenants and developers need to see
a "short-term and long-term solution" for lower Manhattan, and soon.
The plan, he said, should lay out the rebuilding of transportation lines and
create a public authority that could override zoning restrictions and have
the power to condemn property for construction.
"This is not something that can wait a year until the cleanup is finished,"
Moskowitz said. "Decisions are being made by major tenants."
Original Publication Date: 10/17/01
© 2001 Daily News, L.P.