World Trade Center Tenants Disperse.
40% reoccupy Downtown, 31% sign new long term leases,
25% backfill existing space, 4% remain undecided.
New York, New York. January 16, 2002.
continues to provide comprehensive information regarding the effects of the
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TenantWise.com research indicates that there were 185
non-governmental tenants over 10,000 sq. ft. in size (“larger tenants”) in
the WTC buildings (“destroyed properties”) and the 23 damaged buildings
surrounding the WTC (“damaged properties.”) Out of 34.5 MM sq. ft. in
destroyed and damaged properties, the larger tenants occupied approximately
23 MM sq. ft. TenantWise.com estimates that governmental tenants accounted
for an additional 1.8 MM sq. ft., and the remainder of 9.0 MM sq. ft. was
occupied by smaller tenants.
At this time, 94% of the larger tenants, representing 22.1 MM sq. ft., have
made decisions concerning their long-term relocation destinations. The
dispersion of the affected larger tenants from both WTC and surrounding
properties falls into three categories at this time. The categories are as
follows: reoccupying space when it is returned to service, leasing new
space, or backfilling space within a company’s existing real estate
||40%, or 9.3 MM sq. ft. of space, will be reoccupied as
tenants return to damaged properties.
||31%, or 7.1 MM sq. ft. of new space, was leased on a
||• 4.4 MM sq. ft. was leased in Midtown
• 0.9 MM sq. ft. was leased in New Jersey
• 0.4 MM sq. ft. was leased elsewhere in New York State
• 1.0 MM sq. ft. was leased in other states or abroad
• 0.4 MM sq. ft. of space was leased Downtown.
||25%, or 5.7 MM sq. ft., has been backfilled into other
unaffected space that was unoccupied or made available within a tenant's
existing real estate portfolio.
||• 2.6 MM sq. ft. backfilled in Midtown
• 2.2 MM sq. ft. backfilled in New Jersey
• 0.9 MM sq. ft. backfilled Downtown.
||4%, or 0.9 MM sq. ft. of space is represented by tenants that
have not yet made their relocation plans known.
In October, TenantWise.com predicted that the destruction and damage of
office space caused by the WTC attack would have very little downward impact
on office market availability rates in both Downtown and Midtown. In fact,
the availability rates that were in place on September 11th have increased.
9.6 MM sq. ft. of available space has been added to the Manhattan market
since September 11th. A total of 43.9 MM sq. ft. (13% of the entire
Manhattan office market) is available today, and represents an increase from
11% as of the third quarter 2001, and from 8.7% in the second quarter 2001.
Availability rates have risen due to lack of demand, continuing influx of
new space availabilities, and the fact that less than one-third of the
dislocated tenants that could lease new space in Manhattan did so.
Destroyed Property Overview
TenantWise.com has determined that on September 11, 2001, the World Trade
Center had 450 tenants in 13.4 MM sq. ft. of which 71 were non-governmental
and over 10,000sq. ft. in size. A summary of the status of these tenants
- 66 of the larger tenants representing 94.5% of the subject square
footage in the WTC buildings have made relocation decisions.
- Of the 66 tenants that have made relocation decisions, 43 will move
a primary location to Midtown, 11 will move to New Jersey or
out-of-state, and 10 will remain Downtown. 5 tenants remain undecided.
The employee populations will be disbursed as some companies have
decentralized operations and have secured space in several locations.
- The group moving to New Jersey and out of state from destroyed
properties alone totals 1.4MM sq. ft., or approximately 6,807 jobs.
larger tenants from the destroyed properties, only 7% of the
represented square feet will relocate elsewhere Downtown, 20% has
left New York State, and 64% has chosen Midtown.|
Damaged Property Overview
TenantWise.com has determined that on September 11, 2001, the damaged
properties had 158 tenants in 18.5 MM sq. ft. 114 of these tenants were
non-governmental, over 10,000 sq. ft. in size, and represented 14.6 MM sq.
ft. A summary of the status of these tenants follows:
- 80 of the tenants representing 70% of the 114 larger tenants expect
to reoccupy damaged space when it is repaired.
- However, the 80 tenants represent only 63% (9.3 MM sq. ft.) of the
total square footage that the largest tenants represent in the damaged
- Of the remaining 34 tenants that have made decisions but will not
reoccupy, relocation plans are as follows: 2.4 MM sq. ft. and 9,800
employees will be moving out of state; 1.6 MM sq. ft. and 6,621
employees will be moving to Midtown; and 0.04 MM sq. ft. and 206
employees will be moving to a new location Downtown.
- Most notably the tenants that will relocate either in entirety or
partially to New Jersey represent 14% of the damaged square feet. The list
of companies moving to New Jersey includes American Express, Citigroup/
Salomon Smith Barney, Dow Jones & Co., Frenkel & Co., Inc., Fuji Bank,
Garban-Intercapital, Global Crossing Holdings, Instinet, John J. McMullen
Associates, Kemper Insurance Companies, Lehman Brothers, Merrill Lynch,
Morgan Stanley, New Japan Securities, N.Y. Shipping Association, and Yasuda
Fire & Marine.
tenants from damaged properties, only 63% of the represented square
feet is returning. 4.9 MM sq. ft., or 33%, has committed to leave
Availability Rates Tripled Since Year-End 2000:
Availability rates have moved upward since September 11th, and
TenantWise.com data indicates that they will not decrease for some time,
despite future lease commitments to be made by displaced tenants.
Availability rates for all of Manhattan for the end of 2Q, 3Q and 4Q 2001
were 8.7%, 11%, and 13%, respectively. Since year-end 2000, when Manhattan
availability was 4.4%, rates have almost tripled.
The increase in the Manhattan availability rate over the last year has
several causes. The overall economic downturn since 2000 resulted in
layoffs, cutbacks and reduction in office occupancy throughout the year. New
York City lost an estimated 94,700 jobs in October and November (source:
State Comptroller 12/20/01 press release.) Through year-end, the estimate is
125,000 jobs. Although one might expect that substantial leasing activity
would have been generated by WTC tenants, this did not occur. Four trends
reflect why the decisions of WTC area tenants who made a decision to
relocate did not cause a decrease in the availability rate: 1) tenants that
represent 5.7 MM sq. ft., or 25% of the destroyed and damaged square feet,
backfilled existing vacant space and removed that potential demand from the
market; 2) 1.9 MM sq. ft., or 8% of the destroyed and damaged property, is
relocating to New Jersey or out of state; 3) many tenants leased less square
footage than originally held (see below); and, 4) many companies
decentralized operations into a few or several locations, both in and
outside of New York (see below).
Decentralization Of Operations:
From TenantWise.com’s analysis of the largest tenants, 22 tenants
representing a total of 13.2 MM sq. ft. from the destroyed and damaged
properties have strategically planned to decentralize operations. Many have
secured space both in Manhattan and outside of the city. Among the larger of
these tenants are American Express, Morgan Stanley, Lehman Brothers, Cantor
Fitzgerald Securities, Dow Jones & Co., Empire Blue Cross, Royal Bank of
Canada and Salomon Smith Barney.
Envelope Reduction And Lost Jobs:
Of 185 total tenants over 10,000 sq. ft. from destroyed and damaged
properties, 173 tenants that have announced relocation destinations
represent leases for smaller square footage commitments than previously
occupied. The total occupied envelope for tenants over 10,000 sq. ft. has
been reduced by 1.1 MM sq. ft. This represents equivalent space for 3,418
jobs and represents a reduction in square footage commensurate with the
reduction in work force due to recent layoffs.
Move Back Not On Schedule:
While 80 of 114 tenants from damaged properties that have the option
to return Downtown have said that they are returning to their spaces once
buildings reopen, many are not moving quickly to do so. For example, One
Liberty Plaza reopened on October 24th for tenants to return. 23 of 35
larger tenants from One Liberty, or 65%, report that they expect to return
to the building. These 23 tenants represent 1.4 MM sq. ft., or 67%, of the
2.1 MM sq. ft. building. Through conversations with tenants, TenantWise.com
learned that only 13 tenants have currently fully returned to their space at
One Liberty, representing a total of 0.4 MM sq. ft. So while 65% of the
tenants have acknowledged plans to return, only 18% of the space is
currently occupied today.
Backfilled Space After 9/11 Indicated Weakness In Market On 9/10:
An indication of the weakness in the office market prior to the
attack is the amount of space that companies were holding in portfolio, but
not occupying. After 9/11, companies were able to backfill employees from
the affected buildings into existing space totaling 13.8 MM sq. ft. If this
amount of space had been put on the market by 9/10, total availability
across Manhattan at that time would have been 39.5 MM sq. ft. Therefore, the
availability rate at second quarter 2001 would have been 11.6%, almost 3
points higher than the reported rate at the time of 8.7%.
Job Count Totals:
Of the 185 tenants surveyed that represent approximately 23 MM sq.
ft, an approximate total of 87,438 jobs have been dispersed as follows:
Projection Regarding All Tenants
- 16,619 jobs have moved to New Jersey or elsewhere;
- 27,190 jobs have moved to Midtown;
- 38,716 jobs are staying Downtown;
- 1,495 jobs are staying elsewhere in New York State; and;
- 3,418 jobs are with undecided companies
TenantWise.com has made
assumptions about government and smaller tenants’ relocation destinations
and has predicted the relocation of all tenants representing the total 34.5
MM sq. ft. from damaged and destroyed properties. TenantWise.com assumed
that government tenants will remain in New York City with 100% reoccupancy
of those that are able to return to a damaged property. The government
tenants that were in destroyed properties were assumed to relocate 75% to
Downtown and 25% to Midtown. TenantWise.com also assumed smaller tenants
will likely follow the patterns of larger tenants from destroyed and damaged
properties. After deducting 0.7 MM sq. ft. related to the square footage
occupied by those who lost their lives in the tragedy (approximately 2,700
individuals), the analysis below reflects the dispersion of tenants from the
net of 33.8 MM sq. ft.:
||46%, or 15.4 MM sq. ft. of space, will be
reoccupied as tenants return to damaged properties.
||30%, or 10.3 MM sq. ft. of new space, will be
leased on a long-term basis
||• 6.2 MM sq. ft. will be leased in Midtown
• 1.3 MM sq. ft. will be leased in New Jersey
• 0.5 MM sq. ft. will be leased elsewhere in New York State
• 1.3 MM sq. ft. will be leased in other states or abroad
• 1.0 MM sq. ft. will be leased Downtown.
||24%, or 8.0 MM sq. ft., will be backfilled into
other unaffected space that was unoccupied or made available within a
tenant's existing real estate portfolio.
||• 3.4 MM sq. ft. will be backfilled in Midtown
• 3.3 MM sq. ft. will be backfilled in New Jersey
• 1.3 MM sq. ft. will be backfilled Downtown.
further information contact:
|M. Myers Mermel
Chief Executive Officer
Chief Financial Officer
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