The September 11th attack
Wall Street unlikely to lose appeal
Associated Press
NEW YORK — Long before the terrorist attacks that leveled the World Trade Center, tenants of Manhattan's downtown financial district had started to migrate from Wall Street to midtown, the suburbs and even the West Coast.
Real estate analysts say the devastation that displaced firms from lower Manhattan this past week might accelerate the trend — but it might also strengthen their resolve to return.
"Offices will be forced to move out of New York in the short term, simply because there's no space for them," says David Beim, a veteran investment banker who now teaches finance at Columbia Business School. "In the longer run, there's an advantage to being clustered in one place. Just like filmmakers in Hollywood, they need to have lunch and talk and look each other in the eyes. Whether that's in midtown or downtown remains to be seen."
About 25 million square feet of downtown office space was destroyed or heavily damaged — about 38 percent of the "Class A" space with the modern wiring and facilities preferred by financial firms, according to the brokerage D.G. Hart Associates Inc.
Since the crash of the dot-coms, Manhattan's vacancy rate has increased, but not enough to accommodate the need for large, open spaces that financial firms use.
Some clients scrambling for new leases are set on getting out of lower Manhattan, said Jonathan Anapol, president of Prime Manhattan Realty. "In today's economy, it's not as essential that people are in the same building or the same immediate area," he said.
But most moves are being called temporary.
Citigroup Asset Management and AIG Global Investment Group said their interim moves to New Jersey are in line with disaster recovery programs set after the 1993 bombing of the World Trade Center.
Oppenheimer Funds is transferring all administrative operations to its Denver headquarters and sending its traders and portfolio managers to a temporary office in New Jersey.
Still, with a chunk of the city's financial district covered in ash and without electricity or running water, it is obvious the cleanup would take months and reconstruction years.
"The choices being made today, don't reflect people's true preferences. It reflects the limited options," said Woody Heller of Jones, Lang LaSalle real estate. "Once there's space to accommodate them, they'll be back to New York since there was a reason to be here in the first place,"
Financial experts also believe that financial firms' concentration is more than emotional, since business remains a highly human endeavor.
"There is an energy that New York City is known for and there's a creative process you get from being with your associates and interacting with clients," says Bruce Mosler, president of U.S. operations for the Cushman & Wakefield brokerage. "There's a huge efficiency and productivity that people sometimes lose sight of that you don't get from the technology."
Historically, financial firms were clustered in skyscrapers around Wall Street, close to the New York and American stock exchanges and commodities trading floors. Until computer technology became available in the 1960s, couriers would carry around suitcases stuffed with the certificates of stocks that had been traded from one firm to another earlier that day.
The financial hub of New York started to disperse in the late 1960s with the growth of technology. White collar workers fled to the suburbs and administrative operations followed. Some company headquarters were moved near railroad stations that were more convenient for commuting executives.
In the 1960s, Gov. Nelson Rockefeller and his brother David, then president of Chase Manhattan Bank, led the development of the World Trade Center to revitalize lower Manhattan.
Still, financial companies are moving away from Wall Street. In recent years, Morgan Stanley moved its base to Times Square, although it still rented a huge amount of space in the trade center. Credit Suisse First Boston is in the area now known as the Flatiron District.
Throughout the 1990s, large financial firms threatened to bolt, inducing the city to give them generous tax abatements. The city needed to fight to get the Nasdaq Stock Market to locate in Manhattan instead of New Jersey.
But real estate experts said that that was purely a game of cat-and-mouse, and that the city and state government will work to ensure that Lower Manhattan continues as a viable office area.
