Downtown comes of age as residential neighborhood

Real Estate Weekly, June 20, 2001

A new report recently released by the Downtown Alliance shows that in the past five years Downtown New York has achieved a balanced mix of commercial, retail and residential activity, emerging as a vibrant 24-hour, seven-day-a-week community.

The report, entitled "Downtown New York: A Community Comes of Age," describes a broad-based public/private initiative that is attracting residents and corporate tenants alike to Downtown New York by residential projects and services, proximity to work, unique architecture, parks, schools and abundant transit. The area employs no fewer than 400,000 workers on a daily basis and lures 7.2 million tourists annually.

The report, prepared on behalf of the Alliance for Downtown New York, Inc. by Hamilton, Rabinovitz & Alschuler, Inc. and Global Strategy Group, shows that an unprecedented wave of residential conversion activity, combined with a healthy tourist industry and a revitalized office market, has transformed Downtown during the past five years. During this period, the population has swelled to 25,000 full-time residents will likely expand to 30,000 by 2005.

Downtown's residential population is currently larger than Manhattan neighborhoods such as Kips Bay or Tudor City, and will soon surpass the combined Stuyvesant Town and Peter Cooper Village in size. Rents for studio and one-bedroom apartments in doorman buildings Downtown saw an increase of 24 percent and 22 percent respectively, in year 2000 -- an increase exceeding that of comparable residences in the Upper East and West Sides.

The new residents of Downtown are young and affluent with significant amounts of discretionary income. Most are either young professionals, families with children or couples anticipating having children and value-seekers anticipating the growth of the residential market. According to a survey conducted in the spring of 2000 of new residents living in conversions, 88 percent are younger than 45, and 76 percent earn more than $90,000 per year. Although this survey did not include residents in Battery Park City, it is reflective of the demographics of residents in that community. A quarter of new households surveyed earned over $210,000 per year -- more than four times the region's median income.

The industries that have clustered in Downtown New York, including the finance, high-tech and business services industries, have played a pivotal role in New York City's recent economic expansion. These industries depend on a young and energetic workforce that places a high premium on living close to the workplace.

Since 1995, a strengthened buisness community and a burgeoning residential neighborhood have succeeded in attracting hundreds of new retail shops, restaurants and museums to Lower Manhattan. Downtown's remarkable progress in its development as a major shopping, dining and cultural destination has been helped by major draws such as the World Trade Center and the World Financial Center retail centers, Bayard's and the National Museum of the American Indian Museum, to name a few.

Today, new residential buildings and conversions, additional shops and restaurants and more cultural institutions and events are planned or Downtown New York. This continued diversification is indicative that the transformation of Lower Manhattan from a strictly business community into a live/work/play community will continue for many years to come.