Pygmalion in Concrete

As an editor, I’ve heard for years that people west of the Hudson simply don’t read stories about New York because no one else can do things on the scale of New York. Conde Nast’s  one-million-square-foot deal at 1 World Trade Center would seem to bear that out. Consider the size, the name, the property, the legacy and all at once you can hear Sinatra belting out odes to the city.

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The market-changing redevelopment of Lower Manhattan, the crown jewel of which is the World Trade Center, is certainly massive and unparalleled in the nation’s history. But there are lessons to be learned that I believe are universal. Fact is, Lower Manhattan was always a low-cost alternative to Midtown.  Tenants gravitated there for cheaper rents and New York addresses. For years—certainly years before 9/11—we heard talk of making Downtown a 24-hour live-work environment and a destination for corporations.

It actually took a disaster, the terrorist attacks, to provide the clean slate on which that dream is finally being implemented. I interviewed WTC developer Larry Silverstein two years ago at RealShare New York, and he said that lease-up of all buildings at the WTC would bring Lower Manhattan on a rental-rate par with Midtown. (Well, Conde’s reported $60 per foot might not match the 100 bucks a pop some Midtown assets are commanding, but it’s well above the 30s and 40s common to Downtown.)

Here’s the point.  Forget size, forget names, forget legacies. If we don’t blow it, this recovery is going to be marked by suburbs, subsectors and cities outgrowing their traditional corporate roles—particularly as we see developers, investors and lenders gravitate to second and third tier markets. In towns like Austin, Minneapolis, Newark or San Jose, it might not be Conde Nast, but it will, on a scale appropriate to those places, be market-changing.