Caption goes here
With 7.6 million square feet of commercial space under construction at the World Trade Center site, the New York City skyline may appear to be adding an unprecedented amount of office space. But a closer look shows that office builders were far busier in the previous periods of Manhattan history. New Yorkers accustomed to cranes looming overhead might be surprised to hear that Manhattan commercial construction is in one of the slowest periods of the past century, according to a recent report by Newmark Knight Frank. In fact, Manhattan lost more office space than it gained in the aughts, according to the report, which details how the city’s commercial construction has ebbed and flowed over the past 100 years. And even as commercial lending begins to rebound, experts say they don’t expect a huge burst of activity in the next few years, despite activity at the World Trade Center site and, eventually, Hudson Yards. The pace of construction tends to rebound slowly after a recession, according to Chris Hanaway, author of the report, which was released in March to little fanfare. Plus, city builders now face obstacles that their predecessors didn’t, from lack of available land to changes in how companies utilize office space. “It’s hard to see a boom coming in commercial construction in Manhattan,” said Marisa Manley, president of the tenant-side brokerage Commercial Tenant Real Estate Representation. “Over the next 10 to 15 years, most of the growth in jobs will likely be in education and healthcare. They’re not necessarily big office users.” Currently, Newmark reported, there is some 8.5 million square feet of commercial office space under construction in Manhattan, with almost all of that at the World Trade Center. Already 1.7 million square feet of space has been rebuilt at 7 World Trade Center, and 2.9 million square feet of space is expected to be added in 2013 at One World Trade Center. As of last month, 64 floors of One World Trade had been completed, and the tower is growing by about a floor per week, according to Daniel Tishman, chairman and CEO of Tishman Construction, which is managing construction of World Trade Center Towers 1 and 4. But that pales in comparison to the pace of construction in other periods in the city’s history, the report showed. First boom Manhattan’s first commercial building boom came between 1910 and 1919, when nearly 66 million square feet of new office space was built, including the Woolworth Building at 233 Broadway and the Equitable Building at 120 Broadway, the report said. As most New Yorkers know, the boom continued through the 1920s, spurred by one of the strongest U.S. economic expansions in history. Over 106 million square feet of space was constructed during the decade, including work on Art Deco icons like the Empire State and Chrysler buildings. But when the U.S. economy falls into recession, building tends to stop quickly, then recovers slowly, Hanaway noted. “Coming out of recessions, building is generally more gradual,” he said. “Investors don’t want to lose their shirts, and developers don’t want vacant buildings. Recoveries are always slower than the other way around.” Accordingly, the Great Depression drastically slowed the pace of building in New York City. Only 48 million square feet of new construction came online during the 1930s, 25.7 million of which had begun the previous decade. During the 1940s, meanwhile, the country was focused on World War II, which meant that much of the country’s industry was devoted to supporting the war effort. As a result, only 4.8 million square feet of space was added to the market, the lowest level of any decade in the 20th century. The industry recovered during the 1950s. As Minimalism took hold, and building materials shifted from brick and mortar to steel and glass, Manhattan added 39 million square feet of offices, according to Hanaway. Construction remained strong through the mid-1970s. In fact, the century’s largest annual increase came in 1972, when almost 23 million square feet of commercial space was constructed, including both the original World Trade Center, the then-tallest buildings on the planet, and 7 million square feet on Sixth Avenue between 42nd and 50th streets. But building slowed during the second half of the 1970s, when the city nearly declared bankruptcy and crime and stagflation took hold. It remained in a funk until the second half of the 1980s, when the economy rebounded, only to weaken again during the savings and loan crisis of the late ’80s and early ’90s. The 1990s saw only 11 million square feet of construction, one of the century’s smallest totals. But several buildings sprouted in once-seedy Times Square, including 4 Times Square, which was developed by the Durst Organization and went up in the late ’90s. Losing, not gaining As the 21st century dawned, a peculiar phenomenon took hold: Manhattan began losing more office space than it gained. From 2000 to 2009, Manhattan shed more than 25 million square feet of office space, and only 21 million square feet of that has been replaced, the report showed. The Sept. 11 attacks in 2001 notoriously removed 13.5 million square feet of office space from Downtown. Of that amount, 9.3 million square feet will return — there is the 1.7 million square feet that has been rebuilt at 7 World Trade Center, and 7.6 million more square feet of space is under construction. Meanwhile, the needs of Manhattan office workers were changing, just as many businesses were forsaking older office buildings in the historic Financial District. During the residential boom of the last decade, some 9 million square feet of office space — including buildings like 20 Exchange Place and 20 Pine — was converted to residential in the Downtown area alone. The aughts saw the construction of office buildings like 11 Times Square, the Goldman Sachs headquarters in Lower Manhattan, 510 Madison Avenue and One Bryant Park. But the credit crunch all but halted the construction of new office buildings in the latter years of the decade. “There has been no building for the past three to four years,” said Jahn Brodwin, senior managing director at real estate consulting firm FTI Schonbraun McCann. The good news, he said, is that the resulting inventory shortage “will translate into higher demand, generating higher rents.” That, in turn, makes it economical to build. Firms such as CIM Group, the Rockefeller Group, Extell Development, RFR Realty and the Related Cos. are accumulating properties on which to build. For example, CIM in December bought 46 East 57th Street for $42.5 million, as part of an effort to develop a series of properties once held by Harry Macklowe. Related is also gearing up at the Hudson Yards area in the West 30s. The company plans a 2.5 million-square-foot office tower, a smaller 750,000-square-foot office building and a mixed-used high-rise with 1.2 million square feet of office space. All are on 10th Avenue between 30th and 33rd streets. It also plans 500,000 square feet of retail space at the base of the towers. The buildings are expected to be delivered between 2015 and 2017. Still, Manhattan may never again see a 1920s-esque construction boom. Manley said businesses have become more decentralized, creating less of a need for office space in Manhattan. “Law firms and medical facilities don’t need as many papers filed,” she said. And technological advances mean companies don’t need as much office space. “Not everyone has to come into the office anymore,” she noted.