The breakdown in services which continues to linger on in lower Manhattan a week after super-storm Sandy tore through the city could make tenants have second thoughts about renting office space in the area. Tenants might think twice before re-leasing or making a move to an area where the rebirth following the terrorist attacks on September 11th 2001 has already been painfully slow, according to a number of brokers.
Thousands of people who work south of Manhattan’s 34th Street have been informed that it is possible they might not be able to go back to their offices for at least another few weeks, as a result of the flood damage and power outages, while others have been told to dress in warm clothes or even bring blankets with them when they go back to work as the offices do not have hot water or heat in an area being dubbed ‘SoPo’ (South of Power).
Although the whole of the metro region in New York could have demands for office space damaged by the storm, it is the region south of Manhattan’s Canal Street, which was hard hit by the hurricane, which could end up suffering the most, according to brokers, with lower demand potentially putting pressure on rents. “I think it’s going to have to impact the reprising paradigm downtown,” says broker Dan Horowitz, who works for tenant representative company Studley. It just makes the downtown decision a bit more complicated.”
Eleven years ago the World Trade Center terrorist attacks saw the downtown office market left reeling, with some structures and even part of the transportation system for lower Manhattan wiped out. Tenants who may have thought about relocation to offices in that area and even the rest of Manhattan could now be dissuaded by fears that they could be hit by the next super-storm to hit New York. “I think this was a blow to all of Manhattan,” says Horowitz. “It may impact space decision in Manhattan versus other areas and the way companies allocate their staffing decision and the extent in which they concentrate people in New York.”
Other brokers are not nearly so alarmist, however, with the president of the New York regional area for Jones Lang LaSalle, Peter Riguardi, saying that while the storm will certainly create challenges for businesses in the area in the short term, the opening of the new World Trade Center, which resumed construction on Monday, will result in a tidal wave of positive market growth for lower Manhattan.
Low-lying areas in Manhattan are where office buildings were hardest hit by Hurricane Sandy. The areas are concentrated along the coast in an area which is referred to as ‘Zone A’, which saw mandatory evacuation during the storm. This move resulted in numerous employers looking to find office space. A number of employees in the area continue to work in temporary spaces or even from their own homes, with 1 New York Plaza, which houses businesses such as Morgan Stanley and the Fried, Frank, Harris, Shriver & Jacobson LLP law firm, likely to remain closed for weeks.