Ironically, it seems that Hurricane Sandy, while delivering a fierce blow to Lower Manhattan, has in fact helped the submarket to bounce back with something of a vengeance.
Overall new leasing increased 21 percent in the 12 months after Sandy compared to the previous 12 months, firms are migrating to Lower Manhattan (in many some cases into buildings that were affected by the storm), those displaced returned, and Verizon replaced a once all-copper network to fiber.
These are a few of the major unanticipated results of the storm outlined in a new report from Jones Lang LaSalle – The Impact of Superstorm Sandy on the Lower Manhattan Office Market: One Year Later – that reviews the impressive comeback.
“It was pretty remarkable overall,” said John Wheeler, managing director at the firm. “The immediate hardships were dealt with and… each week the evidence of the disruption went away.”
In the days following the storm, JLL reported that one-third of Downtown’s office inventory was out of service. But the lights weren’t out long: by December 31st, over 31-million-square-feet of the 33-million-square-feet of inventory was back online.
By the end of March this year, just one building, 110 Wall Street, was offline – a rare case where ownership was forced to cancel tenant leases. And firms moving to Lower Manhattan in the year post-Sandy are expected to be the highest since 2006, the report shows.
The increase in leasing activity was in fact strongest among the 47 office buildings directly impacted by the storm, within which new leasing increased 38 percent in the 12 months following Sandy. By comparison, Midtown leasing increased 8 percent, while Midtown South leasing decreased 24 percent.
“Most surprising was the strength of the leasing market post sandy,” Mr. Wheeler said. “The community really focused on getting things back to where it was, but also to provide enhancements.
“Lower Manhattan now has the most advanced network in the country,” Mr. Wheeler added, noting that unlike the copper wire destroyed during the storm, Verizon’s new fiber wire can withstand exposure to saltwater flooding, in the unfortunate event that another storm hits.
In addition, mechanical systems in many cases have been moved above ground floors, with 85 percent of landlords implementing measures for protection from future storms, and the city government has launched studies and reports regarding additional preparatory measures.
Among the largest leases of the year, representing relocations to affected buildings in the submarket was the NYC Health and Hospitals Corporation’s 221,000 square feet at 55 Water Street; Nyack College’s 166,000 square feet at 17 Battery Place North; and Droga5’s 91,000 square feet at 120 Wall Street.
The retail market is blossoming as well Downtown, with notable deals of the third quarter including Urban Outfitters’ 20,900-square-foot lease at 180 Broadway, City Sports’ 10,000 square feet at 50 Broadway and TD Ameritrade’s 10,000 square feet at 100 Broadway. Meanwhile, Brookfield Place is bringing an impressive array of high-end retail, 1 Word Trade is expected to do the same, and many anticipate a spreading of that wealth.