The numbers are difficult to fathom. Between 11 million sq. ft. and 12 million sq. ft. of office space was destroyed within hours after the terrorist attack on the World Trade Center in New York City that occurred Tuesday morning, according to New York-based Cushman & Wakefield, the city’s largest commercial real estate firm. City officials say that thousands of people have either been killed or are still missing. In addition, the fiery explosions and flying debris caused an uncertain amount of collateral damage to neighboring office buildings.
At 1 p.m. Wednesday, Sept. 12, some 28 hours after the attack, Bruce Mosler, president of U.S. operations for Cushman & Wakefield, spoke with reporters during a teleconference. Following some prepared remarks in which Mosler expressed his feelings of horror, outrage and profound sadness for what he described as a "dastardly attack on the World Trade Center and on our city," he fielded reporters’ questions. What follows is an edited transcript of that press conference compiled by NREI Editor Matt Valley.
Q: Do you think that because of what happened yesterday, companies might decide to shy away from skyscrapers and move to new-rise territories in sites such as New Jersey?
Mosler: I think that New Yorkers have tremendous resolve. When this type of dastardly attack occurs, I think it only strengthens their resolve. You will see New Yorkers rebound. I do not think you will see a company exodus from New York. Companies are here for a reason. We are still the financial capital of the world, and I expect that we will remain so.
Q: Where are displaced tenants going to find large, contiguous blocks of space that they occupied in the World Trade Center, particularly with only a 7% vacancy rate in Manhattan?
Mosler: We’ve had a 7% vacancy rate, but we had sublet space coming on the market. I expect that you will find opportunities through the sublet market that had been created by some of the tech firms and dot-coms that were going away. You will see other pockets of space that people find and can protect. There were companies with surplus space. They will now be able to backfill with their own surplus and you will find other opportunities.
Q: What about downtown? What does this do to downtown as a submarket and the attractiveness of it? And as a follow-up question, where does this leave the stock exchange project as a magnet for possible terrorism?
Mosler: I think the question has to be broken into two pieces. First of all, I think downtown will rebound. Like everything else in life, the next few weeks are going to be difficult. There is just a tremendous amount of work that has to be done to try to save these lives. Downtown will come back and will rebound and will be a viable submarket place.
As for the viability of the stock exchange project, I believe that if it was going to go forward before, it will continue to go forward today. And I don’t think people are concerned about terrorist attacks in high-profile properties because every building in New York carries a high profile. I think people are tough here.
Q: What was the cost per square foot for office space in Manhattan prior to yesterday, and what impact do you think will be felt in terms of prices?
Mosler: The prior weighted average was approximately $65 per sq. ft. There are higher rents in specific buildings, and there are lower rents in others, but that was our average weighted cost of Class-A space. How do I think it will be affected? I think it’s very difficult to tell. But I do not think you will see a drop in price. There probably will be a rise in price, but it’s too early to tell how much. You are not going to see price gouging by landlords. You are going to see people reach out and help one another.
Q:You say that between 11 million and 12 million sq. ft. of office space was destroyed in that neighborhood. How long will it take to move that much office space? Are we looking at three months? Four months?
Mosler: I think that you will probably see a relatively large chunk of it move relatively quickly. It depends upon whether people move into built space or space that has to be built out. You will see a combination of these things occur. You will see people housed temporarily in some cases and permanently in others. It depends on whether people move to temporary or long-term solutions. You will see temporary solutions occur very quickly — 30 days or under.
Q: When you’re talking about solutions, how can companies such as Morgan Stanley replace their trading facilities? Are there any trading facilities hanging around waiting to be used?
Mosler: I would be taking an unreasonable position by trying to tell you what is currently out in the marketplace. Obviously, you will see people find their trading stations and string them temporarily, relatively quickly.
Q: Have you actually had any phone calls from people saying, "Listen, Morgan needs this much space"?
Mosler: I cannot tell you by whom, but as the largest commercial real estate company in the city, Cushman & Wakefield has received such calls. We are working with those people to find solutions.
Q: How many square feet is Cushman looking for now on behalf of clients, based on requests that you’ve had since the bombing?
Mosler: At the moment, I think it’s reasonable to say that we’re looking for several million square feet or more.
Q: Will you offer help gratis to displaced tenants as a result of this incident?
Mosler: Suffice it to say, we will be providing a number of services pro bono. There will be other services that clearly we will be reimbursed for as part of doing business. As I said to ourtroops this morning, C&W is going to act with the highest degree of professionalism. That is our mission, our goal. That is what’s driven our success over all these years.
Q: Do you foresee a landmark office complex such as the World Trade Center ever being built again?
Mosler: I think that’s a great question, but it’s very difficult to answer at this point because we have a ways to go before we get to the end of the line in terms of helping people out.
Q: What’s your personal opinion?
Mosler: My personal opinion is that I believe in American ingenuity. I would not be surprised. Will it be the same size and capacity? I think that’s an impossible question to answer, but I’m willing to say we will see new buildings.
Q: Do you think this will fundamentally alter the status of Wall Street given the fact that a lot of financial institutions have already moved uptown?
Mosler: I do not. I think people recognize what happened for what it was — a terrorist attack, a cowardly one. I think that people recognize that it could have happened in Midtown or Downtown. I do not think it will alter the landscape of downtown. I think you will see those businesses downtown rebuild, and I think you will see people remain strong.
Q: What impact is this going to have on Silverstein Properties and the other investors of the World Trade Center? They’ve obviously taken a monumental hit. (Earlier this year, Silverstein entered into a $3.2 billionwith the Port Authority of New York and New Jersey to net-lease the two towers and other buildings on the site for 99 years.)
Mosler: I cannot begin to tell you that because no one who attempts to answer that question would be answering it in the know. I don’t know the financial structure of the deal. I know our thoughts and prayers are with them.
Q: Did Cushman & Wakefield sustain any losses in this tragedy? Will you be planning any kind of memorial in the wake of this incident?
Mosler: To the best of our knowledge, Cushman & Wakefield did not suffer any losses nor did any Cushman & Wakefield-related companies. We have already begun to have counseling for our staff. They are meeting with appropriate people. I have met with the brokerage staff and we continue to support them. We have a phone number that people can call 24 hours a day for any needs that they may have outside the business world. I myself have given my home number, my cell number and my work number to anybody who has the need to talk, or who has an idea on how we could reach out to the community.
Q: Did you have any people in the building at the time of the attack?
Mosler: To the best of our knowledge, we did not have people within the building itself. We had people in neighboring facilities. Fortunately, they were okay. The answer is "no," but I can’t be 100% sure because obviously we’re still doing checks.
Q: Please clarify an earlier question. You said you’re looking for several million square feet on behalf of clients. How many clients actually have asked you to look for space for them?
Mosler: Dozens. Some are asking for large blocks and some have smaller requirements, but we’re receiving all kinds of requests.
Q: What is the net effect on the sublease market?
Mosler: Well, I clearly think a large chunk of it will be absorbed.
Q: What is the total sublease available now?
Mosler: You had approximately 9 million sq. ft. of sublease space in New York City prior to this incident. That figure includes all classes of space.
Q: What about total available space, including sublease space and direct space?
Mosler: I think approximately 14 million sq. ft.
Q: Are there any large blocks available?
Mosler: To be candid with you, there are some. I couldn’t tell them to you off the top of my head.
Q: What is the total office space inventory in New York City?
Mosler: Prior to this incident, we were approaching 380 million sq. ft. of office space, and I think with conversion we’re approaching closer to 400 million sq. ft., tertiary space included.
Q: You’ve been living through this incident at ground zero, so to speak. What point would you like to impress upon those readers elsewhere in the nation regarding the ordeal you’ve been through this week as a community?
Mosler: What I’d like to impress upon people who are not sitting in New York is that you cannot believe the resolve that New Yorkers have and the heroism that’s been displayed by any number of New Yorkers. That includes all the state, city and government forces who are working to save people, and the day-to-day people who have reached out to help one another. There is a sense of coming together. There is a sense that they [the terrorists] may have bloodied our nose, but by all accounts we expect to come back stronger and better than ever before. This is something people are taking personally.
Q: Can you share with us accounts of how your people may have helped others, either by pulling people out of the wreckage, or giving blood or contributing to the relief effort?
Mosler: I can’t tell you individual acts of heroism because some of those people aren’t in today, some of them will be in tomorrow. I can tell you something that I think displays the very best of C&W. There is a blood drive under way to which any number of people here, including myself, are going to contribute. We’re doing it on behalf of those people who have been injured or harmed.
There are people, such as myself, who have not gone to sleep in 30 to 35 hours and who remain committed to our clients. We’re working with the city and government agencies to get fuel to some of the buildings that require it, that have to be operating 24/7. These are instances where the grid has gone down and power isn’t available. With the help of the city and state, we are arranging to get oil to these buildings. We’re also working with the police, the FBI and other agencies that we have to work with.
Q: Have you felt any sense of fear among clients about moving into other high-profile buildings such as the World Trade Center?
Mosler: The answer is "no." I’ve been in touch with some of our key clients, and I see the exact opposite. I will reiterate what I said because I really want this point to come through. I see clients, New Yorkers and the companies that are here, and dedicated to remaining here, more resolved than ever. If anything, they are going to show the people who perpetrated this deed that they cannot shut us down, they will not shut us down.
Q:Precisely what is the extent of the damage to the World Trade Center and the surrounding area?
Mosler: What I am aware of is that One, Two and Seven [World Trade Center] are gone. I am not aware of other buildings having come down.
Q: Is there something that you want people to know about the real estate industry in New York?
Mosler: I want people to know that I believe this industry is one of the most outstanding in terms of giving back to the community. In times of trouble like this, we always rise to the occasion. I am so proud of this industry. I’m referring to our friends, our competitors and the like. I think you will see an extraordinary level of support for one another on behalf of the people who have been affected, and to me that is a measure of the city and the companies involved.
NREI will continue to cover this story of tragedy and triumph in the days and weeks ahead. Please direct all editorial suggestions or inquiries to New York beat reporter Cristina Gair at 212-462-3645, or Managing Editor Steve Webb at 770-618-0253.