The new real estate battle: Downtown vs. Midtown
Midtown, the commercial heart of the city, may be a showcase of restaurants, shops and nightlife, but it’s increasingly fighting for office tenants with the neighborhood where business in America began: lower Manhattan.
The rising towers of the new World Trade Center are breathing new life into the Financial District and could spark a broader revival in the commercial market downtown and threaten midtown’s longtime dominance, real estate observers told amNewYork.
One World Trade Center — already the tallest building downtown — even stole one of midtown’s best-known tenants: Condé Nast, which is leaving its Times Square digs to fill 1 million square feet in the skyscraper by 2014.
Such a high-profile deal is sure to catch the eye of the business world, experts said.
“A lot of brokers from several different firms have seen an increase in midtown tenants touring space in lower Manhattan,” said Nicole Kolinsky, a spokeswoman for the Downtown Alliance. “That has a lot to do with the Condé Nast lease at One World Trade.”
The prices don’t hurt either.
During the past decade, overall asking rents in lower Manhattan averaged $18.23 per square foot less than midtown, according to commercial real estate services firm Cushman & Wakefield.
“The resiliency of the Manhattan real estate market and economy was evident after 9/11, when some economists predicted that downtown would take decades to recover and tall buildings in big cities would lose their desirability,” said Jeffrey Rogers, president and COO of Integra Realty Resources. “None of that happened, and no other market did as well as [downtown] during the most recent real estate boom.”
These days, lower Manhattan is starting to look a lot like the center of the city.
“Multiple new developments, the emergence of high-end retailers and extended hours of many conveniences have transitioned this into a 24/7 neighborhood,” said Daniel Hedaya, president of Platinum Properties. “The opening and rebuilding of [One World Trade] is going to make a dramatic difference in the commercial profile of [the Financial District]. It will give an allure not only to tourists, but it will be the home of the best commercial building in the city.”
Residential developers also are finding plenty of business downtown, turning former office towers into luxury condominiums.
The building at 20 Pine St., more than a century old, was converted from an office high-rise into a condominium with 406 units in 2006.
Within two years, the building — with pads ranging from $625,000 to $3.1 million — was nearly sold out, said Lori Ordover of the Ordover Group, a consultant to the developers of the project.
But Rogers cautioned that, even with the hubbub surrounding the WTC site, downtown won’t be bumping midtown (with its proximity to Grand Central and Penn Station) as head honcho of the city’s business districts.
“Downtown will become a case study of revitalization,” he said. “However … despite the interest and recent gains, the Financial District will never be midtown, which is arguably the best office market in the world in terms of desirability for working and living.”