Downtown stakeholders present an upbeat take on the future of lower Manhattan, even now
Hurricane Sandy might have swamped lower Manhattan, and raised doubts for some people about its long-term viability, but few of those doubts were on display Thursday morning at a forum hosted by and featuring real estate players with an interest in seeing the neighborhood thrive.
"Here's the headline: today 99 percent of commercial office space is open," said Liz Berger, the president of the Downtown Alliance, which co-hosted the event with the Real Estate Board of New York. "Ninety-nine percent of residential inventory is open. Ninety-six percent of hotel rooms, open. And 90 percent of small businesses are open and back in business."
Hurricane Sandy devastated much of lower Manhattan, sending millions of gallons of water into the Brooklyn- Battery Tunnel and the World Trade Center redevelopment site, inundating Verizon switching stations, surging into Battery Park and knocking all of the subways that pass through the neighborhood offline.
Like much of Manhattan's lower half, the neighborhood also lost power for days.
The Downtown Alliance, which manages the neighborhood's business improvement district and has historically acted as something of a cheerleader for the neighborhood, hosted today's event with the Real Estate Board of New York, the real estate industry's most important lobby, many of whose boardmembers control property downtown.
The forum was held on the 18th floor of 100 Wall Street, where, during Hurricane Sandy, flood waters submerged the basement and filled the lobby with four feet of water.
Lower Manhattan's waterfront was built on landfill, and the neighborhood's susceptibility to rising sea levels has prompted calls for major infrastructure investments to better protect it from rising sea levels.
But if any of this has sown doubt about the area's long-term viability, that doubt was only nominally reflected in the data presented by the Alliance on Thursday morning and in the tone of the accompanying panel discussion.
Office space leasing held steady through the end of the year, with the overall vacancy rate falling to 8.8 percent and asking rents averaging $40 a square foot.
Apartment sales role, apartment rents continued to climb and the apartment vacancy rate fell, but sales prices did decline 18 percent in the fourth quarter, compared to the same period the year before. Condos and coops also took longer to sell.
Despite the mass closure of tourist attractions following Sandy, lower Manhattan still ended the year with more tourists than the year prior.
Four months after the storm, the two hotels that are still offline and most of the seven apartment buildings that are still closed sit near the South Street Seaport, according to Berger.
Retail got hit harder than everything else, and those numbers proved fairly hard to gloss over.
Four months after Hurricane Sandy, 10 percent of retail establishments remain closed.
“The recovery of the retail market has been a little bit more challenging," said Berger.
Patricia Dunphy, who works for Rockrose, recently brought gelato company Grom downtown to see a retail space, but the company's representative "got scared off," she said.
"In a year from now she’ll be sorry she didn’t do it, because it’ll be back, so we’ll see," said Dunphy.
There are, it should be noted, other possible explanations for some of these upbeat stats: namely, that some inventory has been taken off the market in the months since Sandy, decreasing the supply accordingly.
"So, you have less supply, and maybe, I’m just speculating, maybe you had some pullback in demand," said Jonathan Miller, the president of Miller Samuel Inc, a real estate consultancy, referring to apartment rentals, in a follow-up interview. "But you had an equal if not greater pullback in supply. So it remains tight."
Same goes for apartment sales, according to Miller, not to mention the fact that sales are such "slow, lumbering transactions" that it might take a couple of quarters to see what, if any, impact Hurricane Sandy had on the condo and coop market.
John Wheeler, of real estate brokerage Jones Lang LaSalle, had a separate explanation for the surprisingly healthy state of the office market downtown: lower Manhattan is still a relative bargain, compared to Midtown and Midtown south.
"Many of the leases that have been signed have been tenants migrating from midtown or midtown south and.....they come down here for the value and then the other attributes," he said, namely, the district's proximity to thriving residential neighborhoods in Brooklyn and New Jersey.