Midtown and Downtown Have Pluses and Minuses

"Our view of Downtown is that it is quite remarkable," says Sheldon Cohen, senior managing director of CB Richard Ellis' Downtown office. "There are companies moving from Midtown to Downtown that five years ago would have never thought of doing it." Two prime examples are the New York Academy of Science and law firm Darby & Darby, both of which lease space at 7 WTC, not your typical Downtown tenants of the past.

"I think stigma of the attack is gone," says Thomas Kaufman, executive director of Cushman & Wakefield's Downtown office. "We are seeing a tremendous push from Midtown to Downtown, especially because of pricing. And if you look at some of the deals--Mansueto, Darby & Darby--those are some big leases. The value is good, the transportation has improved and...there have been a lot of amenities added to Downtown."

Kaufman describes the area now as "truly mixed use." He also adds that the tower portion of 40 Wall St. has some interested perspective tenants, including two hedge funds and two law firms. The floor plates in the tower are about 8,000 sf to 9,000 sf, according to Kaufman.

But not all see Downtown as a rosy picture, particularly with some 8.8 million sf of space slated to come on the market split between the Freedom Tower, and Towers 2, 3 and 4. "As Midtown heats up, we are hearing of an uptake in Downtown," says Marisa Manley, president of New York-based Commercial Tenant Real Estate Representation Ltd. "The facts just don't support it." She tells GlobeSt.com that the nearly nine million sf coming on the market, "will likely increase vacancies and depress the Downtown market."

She continues, "Revitalization has to be driven by demand, not through subsidies and moving government jobs from one building to another. If there is no jobs growth Downtown, there will be no increase in demand for real estate and no decrease in the vacancy rate And just why would the government continue subsidizing if the asking rents are 60% to 70% that of Midtown." The next few months should prove interesting to see if indeed Downtown can expand occupancy and hold more jobs as Midtown rates continue to go through the roof.