NEW YORK CITY-“Optimistic” was the word of the day Thursday morning at a panel discussion of Downtown's future in the wake of Hurricane Sandy. Hosted by the Downtown Alliance and the Real Estate Board of New York, the talk included a group of heavy hitters who were introduced by City Council speaker—and leading Democratic mayoral candidate—Christine Quinn.

“We responded quickly to get people back in their homes and businesses, but I'm worried that people think Lower Manhattan is not open, so there's a lot of work to do,” Quinn said. She and others are working to determine how building codes should be changed and what other changes should be made post-Sandy; those recommendations will be made within six months, she said.

She urged brokers and the many others present to share any concerns with her or other council members, though she was confident New York will get the job done. “If there are things you think we should be doing, or that should be higher up on our agenda, call and let us know. When we turn the corner, we will be an example to cities across America.”

Panelists shared a similarly upbeat outlook. The group was comprised of David Cheikin, VP, Brookfield Office Properties, Patricia Dunphy, SVP, Rockrose Corp.; Meyer Last, partner in the law firm of Fried, Frank, Harris, Shriver & Jacobson; Chris Levendos, executive director, Verizon; Kevin McCann,managing director, Cushman & Wakefield; Peter Poulakakos, owner, Poulakakos Family Restaurant Group; Bruce Surry, EVP, CBRE and John Wheeler, managing director, Jones Lang LaSalle. The panel was moderated by Steven Spinola, president, REBNY.

The group shared its views after more positive news from Downtown Alliance president Elizabeth Berger. “Lower Manhattan's recovery from Sandy has been vigorous,” she says. “Tenants leased 1.23 million square feet below Chambers Street last quarter, and Lower Manhattan residential rents increased 7% from the previous quarter.” She also noted that, among impacted properties downtown, 99% of commercial office space is open; 99% of residential inventory; 96% of hotel inventory and 90% of retailers.

Said Cheikin, “From an office occupancy standpoint, interest is strong. There's great interest along the waterfront.” Prospective tenants who were interested before the storm are maintaining their interests, adds Surry. “Every leasing deal that was in the works before the storm has moved forward.” And Wheeler added, “Post Sandy, we've seen over a million square feet of leasing in affected buildings. If we were going to see tenants move away, those buildings would have been the poster child for it.”

In fact, Lower Manhattan's inventory is stronger in Sandy's wake, some panelists noted. “Downtown is now about sustainable architecture,” said Surry. “Tenants are demanding more, and they will get it because of upgrades that have been made.” In fact, the same morning as the panel, CBRE closed a deal at 55 Water St., the city's largest office building, after changes were made to boost the building's hurricane preparedness. The tenant, Liberty Mutual renewed its previous lease but doubled its space to 120,000 square feet in the new, 10-year lease.

“Generally speaking, the buildings Downtown are now stronger than those in the midtown area, adds McCann. “They have more fuel oil, extra generators and redundant power.” Even the infrastructure has been beefed up. “This area is now an almost completely fiber optic wire-lined area,” says Levendos. “I'm optimistic because I've talked to hundreds of people who are hopeful and working to be fully up and running. Our equipment investment Downtown since the storm is 20 times larger, on an annual basis, than what we invested last year.”

One illustration of such improvements can be seen at 1 New York Plaza, which was entirely flooded on the first floor and below grade. The Brookfield-owned structure—whose high profile tenants include Morgan Stanley, Wells Fargo, and Fried Frank— now has completely revamped electric, sprinkler, HVAC and elevator systems. Says Cheikin, “There's a perception problem Downtown but there's not a reality problem.”

Still, there are challenges ahead, some admitted. “I think it's going to take some time for new retail to come down here,” said Dunphy. “I brought a woman from Grom Gelato, the Italian ice cream maker, to Lower Manhattan recently and she got scared off. Still, Dunphy insists her client missed out. “In a year, she'll regret not signing the lease.”

Poulakakos, who owns 20 bars and restaurants in the Downtown corridor, including some that were flooded or sustained damage, is planning changes to future projects. We're building Pier A to be able to take on water and we're trying to get more of our services, like electrical, up on the roof in some of our buildings.” More broadly, McCann says, “all critical infrastructure that was in basements is being relocated. Also, we're studying whether we can do flood gates [on future projects] so recovery will take days instead of weeks.”

Still, with all the improvements, downtown is clearly on the rise, some panelists asserted. “I'm not 'cautiously' optimistic,” said Wheeler. “With the amount of leasing that's been going on, the future's only going to get better. Everyone will see tremendous value in this market.” Added Poulakakos, “If you're optimistic about New York, there's no reason not to be optimistic here.”

And Spinola concluded, “Like the $6 million man, we're building Lower Manhattan bigger, stronger and better than before—even though it's going to cost much more than $6 million.”

Instant Insights /

Post Sandy, Downtown Seen As Better Than Ever

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