Downtown recovery room
Post-9/11 progress includes tripled pop.
SEVENTEEN
years after 9/11, downtown is thriving so impressively that a visitor from Mars wouldn’t suspect that a terrorist attack killed nearly 3,000 innocent victims and left much of the area’s heart in ruins.
But because it’s almost too easy to sentimentalize 9/11 itself, today we’re taking a slightly more guarded look at the bold and resilient blocks south of Chambers Street.
Good news first. Crain’s reported that WeWork is closing in on a deal for at least 200,000 square feet at One World Trade Center — a big step toward filling the nation’s tallest office tower.
The new South Street Seaport is racing toward completion. A deal’s in place to finally bring the stalled Battery Maritime Building hotel and restaurant project back to life.
The residential population has swelled to 61,000 — three times as many as pre-9/11. Apartment buildings and hotels are going up seemingly on every block.
There are so many families and visitors that you can stroll through parts of the area — the beautifully redesigned Battery (formerly called Battery Park) or narrow William and Pearl streets teeming with dog-walkers and bar-goers — and forget that you’re in an office district at all.
The office market currently looks markedly strong, at least on paper. But is it possible that FiDi might one day be perceived more as a residential neighborhood than as the nation’s third-largest business district, which it remains despite the migration of some finan- cial companies to uptown?
It might sound far-fetched. But the successful conversion of so large and tall an office tower as 70 Pine St. to rental apartments makes one wonder which obsolescent old skyscrapers might be next.
Some long shadows hang over the office scene that could prompt more residential conversions. Certain optimistic office-market statistics belie that challenges lie ahead.
Yes, Downtown enjoyed its strongest quarter of leasing activity in seven years, including McKinsey & Co.’s lease at Three World Trade Center, according to the Alliance for Downtown New York’s secondquarter data.
Nonetheless, although looming vacancies amount to a very small percentage of the roughly 105-million-square-foot market, there are some huge availabilities coming in the next 24 months.
On the East Side, the largest upcoming vacancy is 1.6 million square feet at 60 Wall St. That’ll happen in 2021, when Deutsche Bank moves uptown to what’s now Time Warner Center.
There are also 1.2 million square feet soon to be empty at 111 Wall St.; 1 million at 7 Hanover Square; and 400,000 square feet each at 199 Water St. and 55 Water St.
On the Hudson River side, around 1.75 million square feet remain up for grabs at Three World Trade Center. Bank of America is expected to leave behind at least 500,000 square feet at Brookfield Place. Condé Nast means to put 350,000 square feet of its space at One World Trade up for sublease.
According to CBRE, despite the strong second quarter, downtown availability inched up 150 basis points from the same period in 2017, to 14.2 percent — mainly reflecting the addition of space to the market of just-opened 3 WTC. Average asking rents were $60.99 a square foot, down 2 percent over the first quarter. The ask compared with $77 per square foot in Midtown and $78 in red-hot Midtown South. Of course, lower rents and ample availability mean great opportunity for the kinds of creative, media and tech firms that have set up shop Downtown over the past few years. Downtown has overcome far worse catastrophes than a few corporate exits — not only 9/11 but also the 2008 Wall Street meltdown and Superstorm Sandy. It surely will triumph again.