By Elizabeth O’Brien
After a long lull, the commercial real estate market is gaining momentum Downtown, industry experts say.
Lower Manhattan’s comparatively low rents, planned transportation improvements and government incentives are among the factors driving the recent upswing. Shrinking office stock in Midtown has also spurred firms to expand or relocate to the area.
“There are a lot of positive signs about Downtown,” said Adam Foster, senior vice president with CB Richard Ellis, the real estate firm. “The impact of 9/11 is behind us and we’re turning a corner.”
Foster said his company currently represents six firms each looking for Downtown space of about 200,000 square feet, a strong indicator that interest in the area is reviving. Liberty Mutual, the insurance company, has decided to expand Downtown and will soon move into space at 1 Battery Place, Foster added.
“Certainly, my understanding from talking to brokers is there’s a lot of interest” in the area, said Shirley Jaffe, vice president for economic development for the Downtown Alliance, which runs a business improvement district.
Rents Downtown can fetch up to the high $30s per square foot for newer office space and up to the high $20s per square foot for pre-war office space, Foster said, a $20 to $25 dollar savings compared with Midtown rates. The commercial vacancy rate below Chambers St. is 15 percent, Foster said.
The transportation hub planned for Fulton St. and Broadway will help reduce the vacancies Downtown, officials say. While some elements of the new Fulton Transit Center have not been finalized, the proposed design will replace the dingy, maze-like Fulton St. station and streamline access to the 2, 3, 4, 5, A, C, J, M, and Z subway lines it currently serves, and also provide an underground walkway to the nearby E,R,W and PATH commuter lines.
Some small businesses will have to close or move to make room for the center, but many see the project as an economic engine.
In a recent resolution, Community Board 1 called the transit hub “one of the driving forces for the economic revitalization of Lower Manhattan and a catalyst for development in areas beyond” the immediate neighborhood.
Civic and business leaders have also hailed the proposed rail link — a $6 billion project that would provide a one-seat ride from Lower Manhattan to Downtown Brooklyn and J.F.K. International Airport — as a major boon to businesses and residents alike.
The governor and the mayor are lobbying for more federal money to fund the projected $6 billion cost of the rail link. According to the Lower Manhattan Development Corporation, the project is expected to return $9 to $12 billion annually in Lower Manhattan and Brooklyn activity.
Even before these planned improvements, Downtown’s transportation gets high marks from local groups. The Everybody Wins! Foundation, a non-profit literacy organization that promotes pleasure reading among children, recently renewed its lease at 350 Broadway.
The organization pairs volunteer readers with schoolchildren throughout the city, and its home base offers easy access to its member schools.
“We can really make our way around New York,” said Deborah Seidel, executive director.
In renewing its lease, Everybody Wins! took advantage of the Small Firm Attraction and Retention Grant program, a city and state program created to promote Downtown in the wake of the Sept. 11 terror attack. The program provides a cash grant of up to $3,500 per employee for companies with 200 or fewer workers that move to or have expiring leases in Lower Manhattan and sign new leases or renewal leases with a term of at least five years. Businesses that were located in the immediate vicinity of the World Trade Center on 9/11 and remain in the area are eligible for up to $5,000 per employee.
“The SFARG program has played a key role in the rebuilding of Lower Manhattan,” said Carl Weisbrod, president of the Downtown Alliance, in a statement. “Most of the companies benefiting from these grants include software and information technology companies, but they also include law firms, not-for-profits, accountants, architects and designers, and other firms that are committed to Downtown redevelopment.”
Everybody Wins! received a $26,250 cash grant from the program and is slated to receive a similar amount in 18 months.
The money “enabled us to put energy into raising money for our programs and not for our sustenance,” Seidel said.
The Small Firm Attraction and Retention Grant is scheduled to expire on December 31, 2004. For more information, call 1-800-STATE-NY, or go to www.nycedc.com/lmbenefits.
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