Almost 30 million SF destroyed or damaged by WTC attack

Real Estate Weekly, Oct 3, 2001

Although the entire World Trade Center complex, 13.4 million SF, was destroyed in the horrific terrorist attack on Sept. 11, those buildings constitute less than four percent of Manhattan's entire office inventory of approximately 353.7 million SF, according to a report by Insignia/ESG, New York City's largest commercial real estate brokerage concern.

Seventy percent of the Downtown market survived intact, as some 28.7 million SF of Downtown office space was affected by the incident - either destroyed or damaged.

Three buildings comprising 4.8 million SF sustained some structural damaged -- 3 World Financial Center, 140 West Street and 130 Liberty (Bankers Trust Plaza). It is believed that these buildings can be repaired within nine months. Seven additional buildings suffered window and facade damage --1 and 2 World Financial Center, 1 Liberty Plaza, 101 Barclay Street, 90 and 100 Church Street and 22 Cortlandt Street. These buildings, comprising 10.1 million SF, are expected to be habitable by office tenants within two to three months. Another building, 4 World Financial Center (American Express Tower), was not significantly damaged, but remains inaccessible at present due to debris, the destruction of the north pedestrian bridge and damage to the south pedestrian bridge.

"Although none of us will ever forget the horrific human toll at the World Trade Center, we firmly believe that the recovery of Downtown will move forward with dispatch," said John F. Powers, vice chairman of Insignia/ESG. "By no later than Jan. 1, we believe that the majority of dispossessed tenants will have returned to the buildings that sustained window and facade damage, and much progress will have been made in repairing the three most structurally damaged properties. Downtown Manhattan will continue to be one of the largest and most attractive office districts in the nation."

According to Insignia/ESG, nearly 1,300 Downtown businesses were affected by the attack and 31 tenants occupying 100,000 SF or more were displaced. Four of them occupied one million SF or more. The largest companies displaced included American Express (1.2 million SF); Merrill Lynch (3.1 million SF); Morgan Stanley Dean Witter (1.4 million SF); Salomon Smith Barney (1.4 million SF); and Bank of New York (800,000 SF).

The vast majority of displaced tenants to date have been able to find space in Manhattan, which had 25.8 million square feet of available space at the time of the incident, according to Insignia/ESG. Relatively little of that available space was already built-out and much of the space was not scheduled to be available for occupancy until later in the year. Despite this, only a handful of displaced tenants have relocated outside Manhattan. The Hoboken/Jersey City waterfront--an extention of the Dowtntown Manhattan market--has garnered the most interest outside Manhattan.

As of Sept. 21, only ten days after the terrorist disaster, ten deals have been confirmed for tenants with requirements of at least 79,000 SF. Insignia/ESG sources indicate another 3.5 million SF of leases are pending. The completed deals are:

* Bank of New York, two deals: 229,000 SF at 330 West 34th St., and 79,000 SF at 111 Eighth Ave.

* Hartford Fire Insurance, 145,000 SF at 2 Park Ave.

* US Customs, 118,000 SF at 2 Penn Plaza

* Thacher Profitt & Wood, 100,000 SF at 11 West 42nd St.

* Zurich-American Insurance Group, 95,000 SF at 601 West 26th St.

* American Express, three deals totaling 681,000 SF in New Jersey and Connecticut

* Lehman Brothers Holdings, 175,000 SF at 70 Hudson in Jersey City

Another major World Trade Center tenant, Marsh & McLennan Companies, concluded a lease for 320,000 SF at 1166 Avenue of the Americas, a transaction that had been in progress before the World Trade Center incident.

The Insignia/ESG report includes statistics on availability of office space in Manhattan and the surrounding suburban markets prior to the Sept. 11 attack. Downtown Manhattan had the lowest availability rate in the region, 6.2%, followed by Midtown Manhattan (7.0%) and Midtown South Manhattan (9.5%). In the suburbs; Long Island had an 11% availability rate; Fairfield County, CT, 12.7%, Westchester County, NY, 14.2%, and northern and central New Jersey, 14.7%.

"Although there was a marked slowdown in leasing velocity in Manhattan this year, Manhattan's overall availability rate stood at just above seven percent," said Powers. "Ironically, largely due to the high volume of sublease space thrown onto the market following the demise of the dot-corns, the market is better poised to accommodate displaced WTC center tenants now than it would have been nine months ago."