Effects of Attack Vary Across Sectors

"The way to describe that is unprecedented," Nassetta said at the National Association of Real Estate Investment Trust's annual convention. "At those levels, hotels have a hard time making money."

While occupancy rates have yet to return to normal, they are getting "fairly close," Nassetta says, while the 10% to 20% cuts in room rates also are being trimmed back.

"We have recovered a great deal. We certainly have not stabilized," Nassetta says. "We understand the depth of the decline. The question is, what's the duration, and where does it stabilize?"

Nassetta, whose company had a hotel at the World Trade Center along with the Marriott Financial Center one block away, was meeting with Swiss Air officials at the time of the attack. He immediately began assembling a crisis management team focused first on life safety issues. Later, company officials began to review insurance policies. A month later, the threat of terrorism remains a detriment to business throughout the US, he notes.

J. Bruce Flatt's Brookfield Properties Corp. has four buildings, with 425 employees and 53,000 tenants in the shadows of the World Trade Center. Evacuations began 14 minutes after the first jet struck, says the REIT's president and CEO. Windows are being re-installed at Brookfield's lower Manhattan holdings, but there are changes in the office landscape, he notes.

"There are going to be some tougher times to lease space," Flatt says. "But we won't get anywhere near where we were in the early '90s."

Besides avoiding the oversupply of the last decade, other trends such as telecommuting failed to take hold, making the office sector's outlook not entirely gloomy, even for high-rise buildings.

"Over time, people will reoccupy office buildings," Flatt says. "We thought (telecommuting) didn't make sense then, and it doesn't make sense now. I don't think it's changed at all since Sept. 11."

Rouse Co. CEO Anthony W. Deering's tenants also went through an unprecedented time after the attacks. "Retailers never had a period before where no one shopped," Deering says. "They had problems getting employees to stores."

As days went by, Deering says shopping centers became gathering places for communities. While security has increased, Deering notes that his properties cannot do strict checkpoints like office buildings have done as retail centers are more public buildings. More disturbing, however, have been "innumerable" evacuations caused by bomb scares, he adds.

While layoffs have dominated the headlines as much as consumer confidence, the economy has yet to have a noticeable effect on the multifamily sector, says Archstone Communities Chairman and CEO R. Scot Sellers.

"Traffic has been surprisingly high," Sellers reports. "Frankly, the real estate business looks excellent. Unemployment is around 5%. It wasn't long ago when 6% unemployment was considered full employment. There are still jobs out there."

CenterPoint Properties Chairman, President and CEO John S. Gates Jr. also notes record car sales being reported, as well as strong Michigan Avenue retail numbers.

"We're business as usual for a recessionary environment," says Gates, who runs a REIT that's the largest industrial owner in the Chicago market. "Our buildings are low profile. They're about the storage and movement of things."