The Aftermath of the 9/11 Attack in the New York City Office Market: A Review of Key Figures and Developments

32 Pages Posted: 11 Feb 2009

See all articles by Franz Fuerst

Franz Fuerst

University of Cambridge - Department of Land Economy; University of Melbourne; City University of New York - Center for Urban Research

Date Written: February 9, 2009

Abstract

Although almost eight years have passed since the terrorist attacks of September 11, 2001, researchers continue to investigate the consequences of this far-reaching event in a variety of scientific disciplines and subject areas. In economic research, a number of more recent publications have added to existing body of literature by elucidating the medium- and long-term impact of the attacks using new methods and/or data.

This paper is more modest in scope in that it reviews the impact of the attacks on the Manhattan's office inventory, employment and rents. Overall, there is scant evidence that the attack have had a long-lasting impact on the Manhattan office market. Of the companies that decided not to return to Lower Manhattan after 9/11, the majority relocated to Midtown Manhattan. Taken together, the core markets of Midtown and Downtown Manhattan captured about 80 percent of the stream of displaced tenants after 9/11, while areas outside of these two core clusters captured only 20 percent, which bodes well for Manhattan's ability to remain a prime office location even in the face of a severe crisis. The majority of businesses directly affected by the attack have opted to remain in the Downtown area or have returned there after the damaged buildings were restored. Moreover, the set of so-called "trophy" buildings proved to be less affected by the recession than the general market, a finding that runs counter to initial assumptions about the future of office high-rises. In addition to a drastic reduction in leased space, accommodation of displaced tenants within the existing office space portfolio of large companies contributed further to lower occupancy rates than had been expected after the destruction of 10 percent of the inventory. This phenomenon, also known as backfill, caused overall absorption to be negative in the quarters following 9/11, since the positive demand created by displaced tenants was more than offset by losses incurred in the accelerated recession.

Keywords: Economics of commercial real estate, September 11 attacks, New York real estate market

JEL Classification: R1, R3, R33

Suggested Citation

Fuerst, Franz, The Aftermath of the 9/11 Attack in the New York City Office Market: A Review of Key Figures and Developments (February 9, 2009). Available at SSRN: https://ssrn.com/abstract=1340049 or http://dx.doi.org/10.2139/ssrn.1340049

Franz Fuerst (Contact Author)

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

HOME PAGE: http://www.landecon.cam.ac.uk/directory/dr-franz-fuerst

University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

City University of New York - Center for Urban Research

CUNY The Graduate Center
New York, NY 10011
United States

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