Has FiDi’s office market recovered from 9/11? A look at the numbers

Brokerage data shows lower inventory, higher vacancy

New York /
Sep.September 11, 2015 03:45 PM
 

UPDATED, Sept. 15, 2:55 p.m.: Fourteen years ago today, the terrorist attacks of Sept. 11 marked one of the deadliest and most traumatic days in U.S. history. A human tragedy above all, they also hit Lower Manhattan’s economy, ushering in an exodus of office tenants that took a decade to reverse.

In recent years, Lower Manhattan’s office market has regained its momentum amid rising rents and the opening of high-profile skyscrapers like One World Trade Center. But a look at the numbers shows the neighborhood still has a ways to go in its recovery.

The chart above shows the office supply in Lower Manhattan, as counted by three different brokerages – JLL, CBRE and Cushman & Wakefield. While the three firms track different inventories, they all clearly show that Lower Manhattan has less office space today than it did in the second quarter of 2001.

The most obvious explanation is the destruction of 9/11, which wiped out more than fifteen million square feet of office space. But the recent boom in office-to-condo conversions also plays a role. For example, Harry Macklowe plans to convert the former Bank of New York headquarters at One Wall Street into condos.

Despite the decrease in supply, today’s availability rate of 12.3 percent (according to CBRE) is almost twice as high as the 6.2 percent recorded on September 1, 2001. And while the average downtown asking rent has risen from $41.80 in 2001 to $56.33 today, that increase is merely nominal. If one accounts for consumer-price inflation (the most common measure for the devaluation of money), rents are almost exactly on the same level today as they were in 2001.

But at least in one sense the market is arguably better off today than it was in 2001. “The market has attracted dramatically more diversified and different composition of tenants,” said John Wheeler, managing director at JLL. Once the almost exclusive domain of financial firms, Downtown has seen an influx of tech and media companies, leaving it less dependent on the fate of a single industry. “It’s still a transformation in progress here in Lower Manhattan,” Wheeler added.

Correction: An earlier version of this post incorrectly referred to the availability rate calculated by CBRE as vacancy rate.


Related Articles

arrow_forward_ios
Upflex co-founders Christophe Garnier and Ginger Dhaliwal (Upflex, LinkedIn/Ginger Dhaliwal, iStock)
Upflex raises $30M, signaling rise of flex-office aggregators
Upflex raises $30M, signaling rise of flex-office aggregators
(photos by Joe Lovinger/The Real Deal)
Day 2 of ICSC: Retailers button up to network, prep for uncertain future
Day 2 of ICSC: Retailers button up to network, prep for uncertain future
(iStock)
Banks, tech among departures sinking Midtown office market
Banks, tech among departures sinking Midtown office market
Industrious CEO Jamie Hodari and CBRE chief financial and investment officer Emma Giamartino (LinkedIn, CBRE)
CBRE doubles down on flex-office provider Industrious
CBRE doubles down on flex-office provider Industrious
Donald Trump, Brett White, and Letitia James with 40 Wall Street (Getty, Cushman & Wakefield, 40 Wall Street, iStock)
Cushman pushes back on subpoena in Trump property probe
Cushman pushes back on subpoena in Trump property probe
Brookfield Properties' Callie Haines (iStock, Brookfield Properties)
Hedge funds, investment firms rare bright spot for office leasing
Hedge funds, investment firms rare bright spot for office leasing
Savills' Jim Wenk (LinkedIn, iStock, Illustration by Kevin Cifuentes for The Real Deal)
Office space up for sublease back on the rise
Office space up for sublease back on the rise
Ron Perelman with 35 East 62nd Street and 41 East 62nd Street (Getty, Google Maps)
Ron Perelman’s former Lenox Hill offices hit market for $160M
Ron Perelman’s former Lenox Hill offices hit market for $160M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...