TenantWise.com Research - WTC Tenants Relocate: 1/3
Backfill, 1/3 Lease New Space, and 1/3 Reoccupy
Effects: Higher Availability Rates, Decentralization and Dispersion
NEW YORK--(BUSINESS WIRE)--Nov. 28, 2001--TenantWise.com continues to
provide comprehensive information regarding the effects of the September
11th attacks upon Manhattan's real estate and economy.
TenantWise.com is an online office broker offering complete listings of all
office availabilities in Manhattan, tenant representation services with a
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The properties of the World Trade Center (``WTC'') that were destroyed or
damaged account for 13.4 MM sq. ft. of office space. The 15 surrounding
properties that were damaged account for 18.5 MM sq. ft. of office space.
(For further details, see Special Report: Damaged Areas at
www.tenantwise.com/reports/wtc_damage.asp.) In total, over 31.9 MM sq. ft. was
destroyed or damaged, a loss affecting 60% of Downtown Manhattan's Class A
TenantWise.com research indicates that there were 179 non-governmental
tenants over 10,000 sq. ft. in size in the WTC buildings (``destroyed
properties'') and the 15 damaged buildings surrounding the WTC (``damaged
properties.'') Out of 31.9 MM sq. ft. in destroyed and damaged properties,
the larger tenants occupied approximately 21 MM sq. ft. TenantWise.com
estimates that governmental tenants accounted for 1.8 MM sq. ft., and the
remainder was occupied by smaller tenants. Approximately 450 tenants were in
the WTC properties and approximately 158 tenants were in the surrounding
properties. Eight of the 15 damaged buildings have now been restored to
service. Restoration and repair schedules of the remaining damaged
properties range from two weeks to five years.
At this time, 89% of the 179 larger tenants, representing 18.7 MM sq. ft.,
have made decisions concerning their long-term relocation destinations. The
dispersion of the affected larger tenants from both WTC and surrounding
properties falls into three approximately equal categories at this time. The
categories are as follows: backfilling space within a company's existing
real estate portfolio, leasing new space, or reoccupying space when it is
returned to service.
Backfilled: 6.3 MM sq. ft. has been backfilled into other unaffected space
that was unoccupied or made
available within a tenant's existing real estate portfolio.
2.9 MM sq. ft. backfilled in Midtown
2.5 MM sq. ft. backfilled in New Jersey
0.9 MM sq. ft. backfilled Downtown.
Newly Leased: 6.0 MM sq. ft. of new space was leased on a long-term basis.
3.6 MM sq. ft. was leased in Midtown
1.2 MM sq. ft. was leased in New Jersey
1.0 MM sq. ft. was leased elsewhere (Upstate NY, Connecticut, other states,
abroad) 0.2 MM sq. ft. of space was leased Downtown.
Reoccupied: 6.4 MM sq. ft. of space will be reoccupied as tenants return to
Availability Rates Now Exceed September 11th Levels: Availability rates have
moved upward since September 11th, and TenantWise.com data indicates that
they will not decrease for some time, despite future lease commitments to be
made by displaced tenants. Availability rates for all of Manhattan for 2Q
2001, 3Q 2001 and as of 11/20/01 were 8.7%, 11%, and 12%, respectively. The
expected beneficial effect on the overall real estate market was tempered by
the fact that only one-third of those tenants who potentially could have
leased new space did. Also, tenants leased less square footage than
originally held, and many decentralized operations into a few or several
locations, both in and outside of New York. Thus, the TenantWise.com
predictions of October 22nd for a decrease in Lower Manhattan availability
of less than 1% and in Downtown of under 2.5% in Manhattan, although bold at
the time, may actually have overestimated the strength of the market. Given
new layoffs and proprietary tracking of over 18 MM sq. ft. that has been
added as available since September 11th, availability rates now exceed rates
on the 11th and the dislocation only slightly slowed the rapid disposition
of space now underway.
Decentralization Of Operations: From TenantWise.com's analysis of the
largest tenants, 22 tenants representing a total of 13.2 MM sq. ft. from the
destroyed and damaged properties have strategically planned to decentralize
operations. Many have secured space both in Manhattan and outside of the
city. These tenants include American Express, Morgan Stanley, Lehman
Brothers, Cantor Fitzgerald Securities, Dow Jones & Co., Empire Blue Cross,
Royal Bank of Canada and Salomon Smith Barney, among others.
Envelope Reduction And Lost Jobs: Of 179 total tenants over 10,000 sq. ft.
from destroyed and damaged properties, 160 tenants that have announced
relocation destinations represent leases for smaller square footage
commitments than previously occupied. The total occupied envelope for
tenants over 10,000 sq. ft. has been reduced by 2.5 MM sq. ft. This
represents equivalent space for 9,910 jobs and represents a reduction in
square footage commensurate with those whose lives were lost, as well as the
reduction in work force due to recent layoffs. Recent estimates count
approximately 4,000 lives lost in the attack; the remainder of 5,910 jobs
could reflect recent cutbacks in the New York workforce.
Move Back Not On Schedule: While 82 of 110 tenants from damaged properties
that have the option to return Downtown have said that they are returning to
their spaces once buildings reopen, many are not moving quickly to do so.
For example, One Liberty Plaza reopened on October 24th for tenants to
return. 23 of 35 larger tenants from One Liberty, or 65%, report that they
expect to return to the building. These 23 tenants represent 1.4 MM sq. ft.,
or 67%, of the 2.1 MM sq. ft. building. Through conversations with tenants,
TenantWise.com learned that only four tenants (Ogaki Kyoritsu Bank, Maria
Fiorini Ramirez, Inc., Hyperion Capital Management, and Flemming Zulack &
Williamson) are currently operating at 100% within their space at One
Liberty, representing a total of 60,500 sq. ft. So while 65% are
acknowledged as coming back, only 3% are currently occupying the building
Job Count Totals: Of the 179 tenants surveyed that represent approximately
21 MM sq. ft, an approximate total of 84,057 jobs have been dispersed as
- 19,085 jobs have moved to New Jersey or elsewhere;
- 25,978 jobs have moved to Midtown;
- 29,877 jobs are staying Downtown; and
- 9,117 jobs are with undecided companies.
For a full report, see www.tenantwise.com and look under the home page
heading ``Special Report: Overview of Current Situation''.
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