Downtown diversity
Manhattan South goes gorgeous mosaic
LOWER Manhattan’s remarkable commercial diversification is exultantly reported in the Downtown Alliance’s third-quarter Manhattan real estate market report.
Financial-related firms occupied 55 percent of office space in 2008 but only 35 percent today, while tech, advertising, media and information (TAMI) outfits tripled their presence to 15 percent — up from just 5 percent — over the same time frame.
The new mix has energized the culture and style of commerce below Chamber Street.
The district’s residential boom is well-known. So are the rise of new hotels and the arrival of uptown stores such as Saks Fifth Avenue.
But there are shadows across the downtown sun as well — some mentioned in the Alliance report, some not.
Third-quarter office leasing was down 24 percent compared with yearago numbers, although the Alliance noted that some large deals that have yet to technically close — such as Spotify’s near-86,000- square-foot expansion at Four World Trade Center — will bring the year to near-parity with 2017.
Lower Manhattan’s overall vacancy rate was 12 percent, compared with 9.2 percent in Midtown, according to Cushman & Wakefield data cited by the Alliance.
The Water Street corridor has sprung serious leaks. Huge blocks of office space will soon become available for direct lease or sublease at 55 Water St., 7 Hanover Square and 111 Wall St. Deutsche Bank will begin exiting 60 Wall St. in 2021 for its move uptown.
Water Street remains one of Manhattan’s dreariest commercial boulevards. It will be years before rezoning to allow stores to replace little-used arcades begins showing results. Work has yet to start on a city-driven plan for new plazas and landscaping.
While the retail scene has obviously improved, large gaps remain. Westfield has yet to announce a single tenant for the vast mall of Three World Trade Center since two big restaurant deals collapsed.
There are plenty of dark storefronts elsewhere, too — perhaps primarily due to an increase in supply rather than to declining demand for bricksand-mortar retail. The Alliance reported that the area will have more than 7.28 million square feet of retail by the end of 2019 — up 2.92 million since 2014.
Although scaffolds and sidewalk “bridges” (i.e., tunnels) blight much of Manhattan, many of the ugliest are in the FiDi/WTC area. Gloomy tunnels recall the wretched condition of the whole area after 9/11.
Much of Fulton Street remains an obstacle course. Some is due to new construction, but many of the jungle- gym eyesores are attached to small old buildings where no work seems to be going on.
There’s plenty to celebrate, of course, about a district that many left for dead — not only immediately after 9/11 but for years more as well.
Among the highlights noted by the Alliance:
TAMI companies comprise 41 percent of leased space at One, Three and Four World Trade Center — compared with just 5 percent of the Twin Towers
WeWork, Manhattan’s largest overall space user, with over 5.3 million square feet, has 319,000 square feet at 85 Broad St. alone, where it recently signed for an additional 76,814 square feet. Downtown overall average asking rent rose to a new peak — to $63.70 a square foot — despite the leasing slowdown. In a “subdued” property sales market, highlights included Bank of New York Mellon’s $352 million purchase of the land under 101 Barclay St. ffrom the city. The Wagner Hotel, formerly a Ritz-Carlton, sold for $473 million, or $94,0000 per room, to Urban Commons. Brookfield Asset Management’s impending purchase of Forest City Realty values the Frank Gehry-designed 8 Spruce St. at $520 million, or $576,000 per rental unit. The tourism tsunami shows no sign of abating. Last year’s 13.6 million visitors were up nearly 8 percent from 2016.