A 28-year resident of Lower Manhattan who has worked in city government for years, Elizabeth Berger now advocates for the area’s economic well-being as head of the country’s biggest business improvement district.
While the neighborhood is clearly more vibrant than in the early 1980s, lately it has struggled. Construction at the World Trade Center site is still years behind schedule. Office vacancy rates will hit 14 percent next year because financial companies have shuttered or moved. And as The Real Deal reported in March, 4 of the 11 new Manhattan developments with the most foreclosure filings are located below Canal Street.
Plus, sales activity in the Financial District, which makes up most of the Downtown Alliance, is still sluggish compared with other Manhattan neighborhoods.
In an interview with The Real Deal, Berger explained how to fill empty cubicles, why Lower Manhattan is a better corporate address than Midtown and the benefits of a live-work district.
Lower Manhattan’s vacancy rate is expected to climb next year, and soon, a pair of new World Trade Center Towers will add 4.4 million square feet, which could send the rate even higher. Will the alliance provide incentives to attract tenants?
Let’s get into the facts before we get into the projections. Lower Manhattan began and ended 2009 with a lower vacancy rate than any other central business district in the country. We are a district that lost more commercial space on [Sept. 11] than exists in the entire city of Atlanta, so the scale here is huge. And I don’t think that 2009 has been a strong year anywhere.
As prices fall in Midtown, the gap between our prices narrows, so we need to change the paradigm here, to add value. We have great public transportation, the capacity for live-work, billions of dollars in public infrastructure, and green buildings. And the new space will be terrific. Different tenants want different things, from floor plates to green technology to the brand of being new and cutting edge.
We don’t offer incentives, but they exist. There are real-estate tax abatements, and commercial rent tax exemptions and a state sales tax exemption. We are also pushing for a green fit-out program that would incentivize tenants or landlords to retrofit their space to make it more energy-efficient.
We also had five of the city’s top 20 leasing deals in 2009: the Gap, 180 Maiden Lane, two at 60 Broad, Claremont Academy on Broadway and the School Construction Authority. (note: correction appended)
What about the delays that have beset the new W New York Downtown? The hotel was supposed to open May 4 but now it’s June 6.
I don’t know how to interpret that, but that’s not our only hotel. Andaz [a new Hyatt brand], at 75 Wall is a case and point. Like the W, it’s a hotel and condo, and restaurant. It’s not only responding to the existing commercial base but the growing and affluent community here.
Some reports show prices starting to inch up for apartments in the Financial District after a long lull. Thoughts?
I think that’s a very encouraging sign, and if you look at the demographics, you will understand why. People are coming for our schools, the parks… the East River waterfront is under construction, and we have Battery Park under renovation.
BIDs don’t usually promote the livability of a place. Why do you?
We understood from the beginning that downtown is about a totality of the experience, with commerce and residential in lockstep. We don’t assess residents [AS BIDs assess businesses], but we were strong, early and loud advocates of 421g [a tax incentive for converting offices to apartments]. The idea is to create a new type of community with complimentary interests.
Four downtown buildings are saddled with foreclosures: the Downtown Club, at 20 West Street; Millennium Tower in Battery Park City; 200 Chambers Street; and Cipriani Club Residences, at 55 Wall Street. Some say it’s because residents can’t afford steep maintenance fees for deluxe amenities. What’s your guess?
Well, the Millennium and Chambers Street are not in our district. And we’re not really experts on the residential market. We track it because we are interested in what residents bring to the overall community. I have nothing really to say about the economics of the real estate.
What about stores, then? For years, residents said there weren’t enough of them, and what did open in the last few years seems focused on ultra-rich shoppers, like Tiffany, BMW and Hermes, on Wall Street.
We have 10 grocery stores in Lower Manhattan, fine wine shops, and Century 21. There are over 1,000 food and retail outlets south of Chambers Street, and there are six greenmarkets south of Chambers Street. General Growth [Properties] is rethinking Pier 17 and the upland part of the [South Street] Seaport, and we have a whole bunch of new restaurants that are always packed. There’s no doubt that there’s more to come, but it is not true that there is not quality and choice. The same range of grocery store that exists in other neighborhoods in New York is here.
Has the pace of rebuilding at World Trade Center been frustrating?
There’s no doubt. But we’re moving forward now, and that’s what’s exciting. This new agreement [between the Port Authority of New York & New Jersey and developer Larry Silverstein to have the developer put more of his own money into building three of the towers] is very meaningful.
What will your neighborhood look like in 2020?
I think it will have low commercial vacancy. I think it will have a real diversity in terms of commercial tenants. Financial services will remain the signature industry, but there will also be growth in media and not-for-profits. I think Lower Manhattan is the last part of New York that looks like old New York, so I think the architecture and the views will continue to have value.