Lower Manhattan has suffered a catastrophic decline in tenants seeking office space since the destruction of the World Trade Center. According to a study by Newmark & Company published in the New York Times there are 13.2 million square feet of vacant office space currently available in the area, up 49 percent, or 4.3 million square feet since Sept. 10.
Although the destruction of the twin towers destroyed 13.45 million square feet of office space, and another 15.65 million square feet were damaged, there’s been no rush to lease space that is available. Many companies have sought to disperse their activities and have leased offices in Midtown, in the suburbs and across the river in New Jersey.
While many tenants and owners are counting on insurance payments to rebuild and repair, there’s a great deal of uncertainty as to the extent of coverage which will be available in the future, and what it will cost. The situation encourages potential tenants to look elsewhere for space. In addition the general slowdown in the economy has led a number of companies to lay off workers, which reduces their needs for office space.
Representatives from the real estate industry are lobbying hard for some kind of terrorist insurance package in the bills pending in Congress, but even that might not be enough to prevent big rate increases in January when an estimated 70 percent of commercial insurance in the U.S. is due for renewal.
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