Lower Manhattan Development
Prior to the events of September 11, 2001, Lower Manhattan, also known as the Financial District, was defined by the nearly-exclusive use of space for the financial sector. The September 11th attacks and subsequent damage and contamination to the surrounding areas and buildings resulted in a loss of 80,000 jobs in Lower Manhattan. Following 9/11, Lower Manhattan has transformed into an area with greater residential options and a more diverse commercial presence. This transformation is in large part due to subsidies from New York City, New York State, and the federal government, which were designed to stimulate development in Lower Manhattan.
In addition to the subsidies targeted expressly at the World Trade Center (WTC) site, New York State and City subsidy programs for Lower Manhattan include real estate, commercial rent, property, and sales tax abatements for commercial entities building, moving to, or renovating space in the area – typically south of Murray Street. One of the most ambitious programs, the Lower Manhattan Relocation Employment Assistance Program (LM-REAP), provides $3,000 in tax abatements per employee per year to businesses relocating from outside New York City to Lower Manhattan, for up to 12 years. A 2006 Good Jobs New York Report estimated that LM-REAP tax breaks would result in losses of $2.5 million to City coffers by 2009.
The Downtown Alliance, a non-profit that works to improve the quality of life in Lower Manhattan, reports that the number of residential units in Lower Manhattan has more than doubled since 2001; 27,000 units in 2008, up from 13,000 in 2001. An additional 3,000 more units are under construction and expected to open by 2011, although it is unclear if the economic downtown will stall completion. In addition, more than 10 hotel projects had begun by the end of 2008. While new construction of residential units seems to be forging ahead, the Downtown Alliance reports that the conversion of office space to residential space has slowed, partly because of the credit crisis and partly due to the 2006 expiration of tax abatements expressly aimed at prompting conversions. With the population of Lower Manhattan more than doubling since 2001, the area has transitioned into a family-friendly 24/7 community, with playgrounds, day care, and schools expanding beyond TriBeCa and Battery Park City.
In the wake of steady growth in both the downtown residential and office markets, many people have begun to question the necessity of using tax-incentives to entice major commercial institutions to build in the area. At the end of 2008, real estate consultant and broker Cushman & Wakefield reported that the office vacancy rate downtown was 7.3%, just below Manhattan’s overall average vacancy rate of 7.4%. Even with the stimulus programs and low vacancy rates, however, the Downtown Alliance reports that there are still 48,000 fewer workers downtown than before 9/11. In addition to a loss of jobs, there has been a shift in the kinds of jobs located in Lower Manhattan. Whereas financial services accounted for 47% of downtown employment in 1993, by the end of 2006 it had dropped to only 30% primarily due to the rising presence of marketing, design, and law firms to the area.
Several development projects are underway in Lower Manhattan. The $60 million exterior renovation of the 1909 Battery Maritime Building is finished and the $150 million interior renovation, which will include a roof-top restaurant, boutique hotel, and Grand Hall for community, cultural, and public uses, is scheduled to begin in 2009. Nearby, a newly-redesigned South Ferry Terminal opened in the Spring of 2009.
Also, under Fulton Street between Church and South Streets, a $32 million project to replace water mains and improve electric, gas, & fiber-optic infrastructure is underway and remains on-budget and on-schedule. The project will be completed by 2012. To ease the inconvenience of the construction to area businesses, the Lower Manhattan Development Corporation (LMDC) has disbursed nearly $500,000 in cash grants to 50 businesses. The LMDC is additionally offering up to $275,000 in construction loan services per business or building owner to renovate facades along Fulton and Nassau Streets. The LMDC also granted $5 million to the New York Downtown Hospital, Lower Manhattan’s only hospital, for the expansion of an $8 million Wellness and Prevention Center that will serve the growing population of the area.
One of the most ambitious residential projects, a Robert A. M. Stern-designed tower at 99 Church Street, will feature 143 condos and a Four Seasons Hotel. The project will only move forward if the developer, Larry Silverstein, can secure financing. Its original completion date was 2010. Another ambitious project, a Frank Gehry-designed tower known as The Beekman, was supposed to be 76 stories and include 900 residential units, a 100,000 square feet public school, an ambulatory care unit, and ground-level retail. Construction on the building had been halted at 38 stories but an agreement to reduce labor costs by labor unions across the city have allowed construction to resume.
Some of the proposed Lower Manhattan projects have caused some concern from local residents and community groups. For example, Community Board 1 and area residents have strongly opposed the City Department of Transportation’s (DOT) $50 million plan for realigning vehicular and pedestrian through-ways at Chatham Square (in Chinatown at the intersection of Bowery, East Broadway, St. James Place, Park Row, and Mott, Oliver, and Worth Streets). Critics oppose the DOT’s proposed transformation of Park Row into green space, claiming that this will slow bus traffic at the already busy 5-point intersection. Park Row has been closed since 9/11 because of its close proximity to 1 Police Plaza, from which emergency operations are conducted. Opponents view the DOT’s plans as an attempt to make permanent what was promised to be only temporary after September 11th. Residents of Chinatown, led by their district Assembly Member, Speaker Sheldon Silver (D-Manhattan), also oppose the City’s plans to build a $13.8 million high-tech emergency command center at 1 Police Plaza, citing worries about increases in the inconveniences posed by police barriers and security checkpoints that already plague the area. Despite the opposition, work on Chatham Square is expected to begin in the summer of 2009 and is expected to be complete in 2011. The timeline for any changes to 1 Police Plaza is unclear. 1 Police Plaza would be part of a larger proposed $100 million Lower Manhattan Security Initiative which would equip the area with high-tech surveillance measures – measures that residents and the NY Civil Liberties Union strongly oppose. The NY Civil Liberties Union has filed two suits against the security plan, one against the Department of Homeland Security and another against the New York City Police Department.
Many Lower Manhattan projects have been plagued by cost overruns and diminishing investment funds in the midst of the currently faltering economy. The World Trade Center redevelopment site has experienced construction delays and budgetary overruns estimated to be in excess of $2 billion, and the future of several of the site’s proposed buildings is unclear due to difficulties in securing anchor tenants in the current economic climate. Nearby on West Broadway, the Borough of Manhattan Community College (BMCC) is experiencing construction delays and funding controversies for Fiterman Hall, which was heavily contaminated and damaged during the attacks of 9/11. BMCC estimates that the decontamination and reconstruction will cost $340 million, an increase of 40% from original estimates. Decontamination of Fiterman Hall is expected to be complete by the October 2009.
The Fulton Street Transit Hub, originally planned to be a landmark station with a soaring glass oculus, has been significantly scaled back and is currently halted due to a lack of funds from the Metropolitan Transportation Authority (MTA). Also nearby, the New York Post reported that a floating ferry terminal in Battery Park City will cost $91.5 million, up from original estimates of $37.4 million. The existing floating dock slips serve nearly 7,800 daily passengers traveling to and from Hoboken, Weehawken, and Jersey City, NJ. The Port Authority suggests that the expanded terminal, which opened March 18th of 2009, could also service Edgewater, NJ, Yonkers, NY, and La Guardia and JFK airports.
With so much construction in Lower Manhattan, the Downtown Alliance is attempting to offset the negative impacts and inconveniences for residents and workers. The organization offers free WiFi is several public spaces, a free lecture series, and the Re:Construction Program, which funds public art displays that manipulate what would otherwise be unpleasant construction barriers and safety infrastructure.
It is unclear how much the credit crisis and faltering economy will impact the market for Lower Manhattan’s commercial space. Commercial real estate services firm CB Richard Ellis Group reports that JPMorgan & Chase, Citigroup, and Lehman Brothers have vacated 4.6 million square feet in Lower Manhattan since the advent of the crisis. In July of 2009, the Federal Deposit Insurance Corporation (FDIC) chose not to renew its downtown lease and instead opted to move to 100,000 square feet of space in the Empire State Building. With Merrill Lynch’s lease at the World Financial Center up for renewal in 2013, many are worried that Bank of America will move Merrill Lynch to its midtown offices, causing a significant glut in office space downtown once the planned WTC site towers are constructed. The effects of these vacancies and available office space remain to be seen.
Last Updated: September 9, 2009
This development is closely interlinked with:
World Trade Center Redevelopment
Fulton Street Transit Center
South Ferry Terminal Project
Downtown JFK-LIRR Link
South Street Seaport Redevelopment
East River Waterfront Esplanade & Piers