As Lower Manhattan marks two years since 9/11, redevelopment progress has come in fits and starts. Insurance disputes and competing visions for Ground Zero's future have cropped up, but one element of the plan is moving forward relatively smoothly — the construction of a new transit hub. This is great news for the office market, which has been reeling ever since that fateful morning in September 2001.
“The transit hub station is an essential, critical amenity to Lower Manhattan. And without it, the revival of the office market will not take place,” declares CB Richard Ellis broker Bruce Surry.
Since the 9/11 attacks, Lower Manhattan's office vacancy rate has spiked. It was hovering around 5.8% in June 2001, but by the end of the second quarter of 2003 it measured a whopping 12.8%, according to New York-based research firm Reis Inc.
“The Lower Manhattan office market is soft but active. Because of the lower cost structure we have seen significant increases in sublet space by tenants,” says Surry.
Sublease space represented 31% of all available space downtown at the end of July, according to CB Richard Ellis. That's an improvement over April 2002, when sublease space accounted for 54% of all available space.
The new transportation hub will consist of three parts: a permanent PATH terminal, a grand point of arrival and an underground pedestrian concourse. The permanent PATH terminal — which will accommodate approximately 67,000 passengers daily and connect lower Manhattan with New York's major airports and ferry systems — is scheduled to be completed by 2006 and will cost an estimated $1.5 billion, according to the Port Authority. And the temporary PATH terminal, currently under construction, should be finished by November 2003 at an estimated cost of $224 million.
The above-ground point of arrival, or central terminal, will be similar to that of Grand Central Terminal and will cost an estimated $500 million, according to the Port Authority. Lastly, the underground pedestrian concourse — a series of connections to 14 subway lines as well as access to the major commercial and residential areas of lower Manhattan — should be completed by the summer of 2009.
“It will enable downtown to compete with other parts of the city in ways it can't right now. There are no real connections to subway lines, and no central points like a Union Square or a Grand Central Terminal,” adds Surry.
Lower Manhattan office landlord Kent Swig is all for the transit hub, and the positive ripple effect it will have on the region. “It is the single most important thing for downtown Manhattan's office real estate,” says Swig, who owns 48 Wall Street, a 324,000 sq. ft. office tower.
“What downtown has always lacked is a major transportation hub,” Swig says. “The single largest complaint tenants have about moving downtown is the difficulty of getting there. It is an absolute necessity for Lower Manhattan.”