Downtown Manhattan is poised for a powerful rebound in coming years despite Wall Street's downsizing and millions of square feet of new commercial real estate expected to come to market, a top Manhattan commercial real estate broker said on Monday.
The newness of the buildings and infrastructure in lower Manhattan, devastated during the September 11, 2001 attacks, will help it recover, possibly at the expense of midtown Manhattan, which has benefited lately as some companies have chosen to relocate several miles north.
My heart has always been downtown, Darcy Stacom, a real estate broker with CB Richard Ellis, told the Reuters Global Real Estate Summit on Monday.
The rebuilding of the World Trade Center (WTC) site will include a number of new skyscrapers such as 1 WTC, until recently known as the Freedom Tower.
That extra real estate, and the departure of several high profile tenants for midtown office space, have put downward pressure on prices, Stacom said.
For example, NewsCorp's (NWSA.O: Quote, Profile, Research, Stock Buzz) Wall Street Journal is moving employees to its midtown offices this month, and Merrill Lynch is expected eventually to move its staff to the Bank of America Corp's (BAC.N: Quote, Profile, Research, Stock Buzz) year-old new tower a block east of Times Square. Bank of America bought Merrill earlier this year.
The severe downturn in commercial real estate has coincided with the worst financial crisis in years, costing Wall Street, the main employer in lower Manhattan, tens of thousands of jobs.
But the relative youth of the new buildings planned for lower Manhattan, along with their green environmental credentials -- key for drawing foreign investors -- will keep the district competitive over the long term, said Stacom, nicknamed Queen of the Skyscraper by her peers.
Though the development of the World Trade Center area remains politically and emotionally charged, the district has a major selling point in its retail properties, now that downtown Manhattan has thriving residential communities, she said.
Downtown did make a substantial transformation this last cycle, and has a residential tenant base, so retail is a good thing for downtown, Stacom said.
Key to downtown's resurgence will be getting its transport infrastructure rebuilt, including a new terminal for commuters from neighboring New Jersey, many of whom work for the financial companies located in lower Manhattan.
When they finally get the transportation structure back in, (downtown) will be the market that will have the greatest strength.
Much of Manhattan's office space is aging, she added. By 2010, some 60 percent of Manhattan office buildings will be at least 50 years old. Exposure to New York's waterfront and a wealth of cultural attractions also support the area's potential.
Downtown inventory is going to be newer, the hotel conversions are new, the retail is new, Stacom said.