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NEW YORK CITY-As we approach the fifth anniversary of 9/11, The Alliance for Downtown New York has identified several indicators of the significant progress made in Lower Manhattan over the past five years, including the revitalized office market, the growing residential community, the expanding retail and tourist activities and the improved quality of life. While much work remains, the recovery achieved thus far has been remarkable.

* Business and Office Market Indicators

After struggling in the wake of the devastation of 9/11/01, the Lower Manhattan office market is undergoing a steady recovery. Office leasing activity has gathered strength in Lower Manhattan since the post-9/11 slowdown, and leasing in 2006 continues this positive momentum with 1.34 million sf signed as of the second quarter. Strong leasing activity has led to increases in absorption every year for the past five years, including more than a million sf of positive net absorption in 2005.

* Office Vacancy Rate

After shooting up 7.3 percentage points to a high of 13.7%, the vacancy rate among office properties in Lower Manhattan began a slow, steady decline. As of 2Q 2006, the vacancy rate has fallen to 11.2%, a decline of 2.5 percentage points from the post-9/11 peak. This trend is due in part to firms taking space off the market for their own use. According to CB Richard Ellis, since the beginning of 2006 more than 1.2 million sf of space has been withdrawn from the market by JP Morgan Chase, General Electric, Merrill Lynch, Guardian Life Insurance, TD Waterhouse and others.

* Office Rents

After 9/11, average rents in Lower Manhattan declined steadily until early 2005. The entry of 7 WTC into the market in February 2005 caused Downtown rental rates to increase $4.55 per sf. Since that time, strong demand has led to a steady upward climb in rental rates, which increased every month from November 2005 to July 2006 to reach $38.57 per sf the highest average pricing since May 2002.

* Employee Perception in Lower Manhattan

Employees are expressing positive views of progress in Lower Manhattan. A recent Downtown Alliance snap poll of more than 1,700 area workers revealed that more than 60% of those surveyed feel that Lower Manhattan is a better place to work than it was three years ago, and 91% are optimistic about Lower Manhattan’s future. Additionally,65% of respondents indicated that they have noticed an improvement in the shopping and dining options Downtown in recent years, and 39% stated that they would consider living in Lower Manhattan in the future.

* Business relocations to Lower Manhattan

Since the beginning of 2005, at least 72 companies have committed to relocate their businesses from Midtown, Midtown South and elsewhere in the metropolitan region to Lower Manhattan. Together, these businesses account for more than 1.5 million sf of new leases south of Murray Street.* Academic Institutions in Lower Manhattan

Since 9/11, three new institutions of higher learning—NYU School of Continuing Education, the CCNY Center for Worker Education, and Berkeley College—have opened in Lower Manhattan, with a combined enrollment of 12,400 as of 2005. These additions raise the number of Downtown’s colleges and universities to a total of six and increased the number of students attending class in Lower Manhattan by 37%.

* Residential Market Indicators

In recent years, Lower Manhattan has become the fastest growing residential neighborhood in New York City. In the years since 9/11, the housing stock in Lower Manhattan has grown by 5,804 units—a 38% increase. This translates into approximately 10,200 additional residents over the past 5 years.

At least six new residential buildings are slated to open in the next several months.When the 4,700 units currently under construction are completed, they willattract approximately 8,200 additional residents to the Lower Manhattancommunity.

Also, Lower Manhattan residents have long been underserved in terms of schools. However, since 9/11, two new schools have opened in Lower Manhattan—the New York City Millennium High School and the private Claremont Preparatory.* Retail

Closing temporarily after 9/11, Downtown’s two destination retailers—Century 21 and J&R Music & Computer World—have not only reopened for business, but have expanded in size and capacity. Retailers displaced by the collapse of the WTC towers have relocated elsewhere in Lower Manhattan and enjoy strong sales in their new locations. Borders Books and Music, Nine West and Papyrus have relocated fromthe WTC to 100 Broadway, 179 Broadway, and 233 Broadway, respectively. The Amish Market, formerly at 130 Cedar Street, has opened two new locations at 17 Battery Pl. and 53 Park Pl..

The recovering office market and surging residential growth have attracted new luxury retailers to Lower Manhattan, including Hickey Freeman and BMW. Leases signed in the past few months will bring Hermes, Tiffany & Co. and Whole Foods to Lower Manhattan in 2007. Quality retailers such as Christopher Norman Chocolates, Sephora, and Equinox have also opened locations in Lower Manhattan over the past several years.

* Restaurants

Since 9/11, 31 new sit-down restaurants have opened in Lower Manhattan, most recently Bobby Van’s Steakhouse, Trinity Place and PJ Clarke’s. Zen Palette, the upscale vegetarian restaurant in Union Square, is under construction and will open on John St. next year .Once a collection of derelict storefronts, historic Stone St. has been transformed into Lower Manhattan’s very own restaurant row. After a dramatic revitalization over the past several years, the area is now known for its numerous restaurants and cafes with outdoor seating. Harry’s Steak, Adrienne’s Pizza Bar and Brouwer’s are just a few of the successful new offerings on Stone Street.

* Tourism

Tourism in Lower Manhattan was down in the years following 9/11/01, but has rebounded with positive growth in 2004, 2005, and YTD 2006. In 2005, attendance at selected Lower Manhattan attractions reached 4.5 million, the highest level since 9/11/01.

* Transportation

Transportation infrastructure and use have improved greatly since the destruction suffered on 9/11. In the last five years the temporary PATH station opened, easing thecommute of some 45,300 riders between New Jersey and Lower Manhattan every day. Construction has begun on the Fulton Transit Center and the new underground connector, which will improve the connections and circulation of more than 300,000 daily subway riders on 12 subway lines.

The Staten Island Ferry Terminal has undergone a $130 million renovation, enhancing the trip of 65,000 daily commuters. The ferry terminal at the World Financial Center is also currently under renovation. Subway ridership in Lower Manhattan has continued to climb since 9/11. After holding steady between 2002 and 2003, the number of daily subway riders Downtown has increased 6% to reach 296,000 in 2005.

The Downtown Connection bus, a free service sponsored by the Downtown Alliance, connects Lower Manhattan’s key business, cultural and retail locations. The bus service has carried more than 1 million riders since its inception in the spring of 2003. As of June 2006, the Downtown Connection has grown to a monthly average of over 63,000 riders.

* Declining Crime

The rate of crime in Lower Manhattan continued to decline after 9/11. Crimesagainst persons decreased sharply between 2002 and 2003 and have continued to fall steadily since 2003. Crimes against property have also decreased in the past five years, with a sharp drop-off between 2001 and 2002 and a steady decline through 2005. In the past five years, the Downtown Alliance has improved at least 11 blocks of Broadway and Park Row as part of a streetscape improvement program. The enhancements include the installation of the Canyon of Heroes outdoor museum, which features 200 granite markers along Lower Broadway commemorating Downtown’s ticker-tape parades. The addition of trash baskets, bollards, and more than 100 street lamps have also greatly enhanced the appearance and security of Downtown’s streets.

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