Rebuilding new york city on the minds of many

Real Estate Weekly, Nov 7, 2001 by Elaine Misonzhnik

The possible effects of the terrorist attacks on New York's economy and the importance of federal aid to help the City recover were the key points of discussion at the Appraisal Institute's "Rebuilding New York" seminar, held on Oct. 29. Representatives from the city's commercial real estate, hotel, and residential development industries participated in the debate on the future of New York's real estate market.

According to Maria Sicola, senior managing director of Cushman & Wakefield's research group, the attacks exacerbated the problems already experienced by the city due to the technology downturn and the slowing national economy. Cushman & Wakefield estimated that in addition to losing a significant portion of its office space, New York will lose approximately 40,000 jobs within the next year.

Sicola pointed out, however, that in comparison with the previous decades, 2000 was an anomaly for the real estate industry and the economic recession the city is about to experience will be far from the worst in its history.

"It's going to be a concerted effort on the part of the federal government and the business community to get us out," she said. "But we expect that in 2002 we will be back to pre-Sept. 11 employment levels."

Ken McCarthy, managing director of the Economic Intelligence Company, noted that the relative health of U.S. economy prior to the attacks makes it likely the recovery won't take longer than a year or two.

"We have an economy in the best shape possible to Withstand a recession," he said. "(Prior to Sept. 11) we already had in place significant reductions in interest rates, we had a surplus in the federal government's budget. The recession will hurt the city, but it won't devastate it."

When confronted with the question of whether the terrorist attacks and the resulting shortage of office space in Manhattan will destroy New York's standing as the real estate capital of the world, McCarthy expressed confidence that businesses will continue to come to the city. "New York is a financial hub and it has an international attribute," he said. "Foreign financial corporations tend to locate in New York. So the economy will continue to grow. And if you are going to continue to grow, you will need more space."

Sharon Greenberger, vice president of development for the Alliance for Downtown New York, was on hand to talk about plans to redevelop the World Trade Center area. She stressed the economic importance of the World Trade Center to Manhattan's Downtown and the necessity for a similar project in the future.

"The World Trade Center was a retail hub, a transportation hub, it was a gathering place," she said. "Because of that, we believe it has to be redeveloped. And it gives us an opportunity to readdress some of the long-term problems with Lower Manhattan, including transportation and waterfront access. The redevelopment of the World Trade Center has to happen."

Greenberger said that the project would require large amounts of money in federal aid, but admitted that the city probably will not receive all it needs.

"I think the designation of the World Trade Center area as a federal empowerment zone would be highly desirable, but highly unlikely," she pointed out. "What we would like to see is the formation of a state authority that would take responsibility for the development of the entire area below Canal Street and would have the power to make things happen quickly. Ideally, it should be (formed) before the end of the year."

The issue of rebuilding raised another question -- how tall should the World Trade Center complex be if it is to be redeveloped?

T.J. Gottensdiener, partner of Skidmore, Owings & Merrill Architects, expressed the view that the viability of skyscrapers is an emotion question, rather than an architectural or an economic one.

"Skyscrapers have been an American invention since the turn of the century," he said. "Some of it had to do with land issues, some of it was a statement. My sense is that Sept. 11 will have a short-term emotional impact, but tenants will continue to occupy high-rise buildings. And New York, in particular, is a skyscraper city."

Gottensdiener also noted that there is little architects can do to prevent the kind of damage the Sept. 11 attacks brought on.

"The Buildings Department will now look at such things as how firemen can better fight fires, the structural issues of making buildings more robust. But there is nothing you could have one to prevent Sept. 11. That will have to happen at the airport," he said.

The issue of decentralization as a direct effect of the terrorist attacks was also discussed at the seminar. In the weeks following Sept. 11, many of the displaced firms leased short-term space in New Jersey and Westchester, raising the possibility that some companies will spread out their operations geographically in an effort to avoid the kind of damage suffered by Cantor Fitzgerald at the World Trade Center.

According to Rob Rediker, senior vice president of Forrest City Ratner, a permanent decentralization scenario is highly unlikely.