The loss of more than 12 million square feet of office space in lower Manhattan due to the World Trade Center disaster has left businesses scrambling to build or expand commercial offices across the river in Jersey City’s financial district.
The immediate impact is evident in the increase of commuters entering Jersey City. According to city Police Lt. Michael Louf, 32,000 new employees are arriving in downtown Jersey City on a daily basis. For the most part, the companies who had occupied office space in Jersey City have either leased more space or temporarily added more employees to their existing space. In short, whatever office space was vacant in Jersey City has been leased since the destruction of the Twin Towers.
In only a month’s time, Lehman Brothers, a financial services firm, has taken over the lease of brokerage firm Datek at 70 Hudson St. They are using 150,000 square feet and subleasing the rest back to Datek.
Merrill Lynch, meanwhile, is reconfiguring its 95 Greene St. offices for a trading floor.
While no one wants to boast about profiting from the tragedy, the fact of the matter is that the need for office space will help out Jersey City’s economy in the short run. Mayor Glenn Cunningham has acknowledged this, but has also said that in the end, the city’s economy is directly linked to New York City’s and will follow the same growth pattern in due time.
"I think every major employer in lower Manhattan is now re-examining its philosophy of concentrating all their employees in one place and starting to look in other areas," said Jeff Kaplowitz, chairman of the Planning Board and a real estate broker in Jersey City. "And Jersey City is one of those areas."
Morgan Stanley, an industry leader in financial services, leases about 200,000 square feet of space at their Harborside II location in Jersey City and has discussed leasing additional space there with Mack-Cali Realty Corporation, according to an article in the New York Times.
According to an informed source, Morgan Stanley may take all of the office space in the proposed Harborside IV building when it is built. Although construction has not even begun yet, the building is expected to house 1.1 million square feet.
Bret Galloway, a spokesman for Morgan Stanley, would not confirm negotiations for Harborside IV. He would only confirm one commitment that already has been made to rent space on Third Avenue in Manhattan.
"We lost a million square feet of space at the World Trade Center, so we’ve had a lot of brokers coming to us with proposals from the whole tri-state area," Galloway said. He said that the company has placed approximately 700 employees at their existing offices in Jersey City for the time being.
Not just the waterfront
Don Eisen, the executive managing director of Cushman & Wakefield, a real estate brokerage firm, said Jersey City would have ended up luring more financial services companies even without the disaster.
"I think much of what you see would have been the case in three to five years anyway," Eisen said. "I think the waterfront is where the action is, and you don’t want to get too far from the waterfront."
The waterfront area isn’t the only hotspot, however.
City planners, administrators, and other real estate brokers have their eyes focused on Journal Square as the future hot spot for prime real estate office space.
"We’ve had a tight market place anyway and this just made it tighter," said Joe Panepinto, owner of the Panepinto Properties, a development firm. "We’re exploring starting another office building in Journal Square. We got calls from a lot of different brokers asking for office space from 10,000 square feet to 250,00 square feet. We don’t have tenants signed up yet, but we think we will shortly."
As of now, however, everything is occupied, Panepinto said. "We got all our spaces full," he said. He added that some of his tenants, such as Automatic Data Processing (ADP), have allowed other firms to borrow office space for the meantime.
City officials anticipate that projects in the works will be expedited in light of the need for new office space.
"I think what you’re going to see is that other projects that are skeletons at this time are going to be built much quicker than originally planned," said Jerome Killeeen, director of the Jersey City Redevelopment Agency. Among those projects that have begun are Harborside V and Harborside X, totaling 1 million square feet of office spaced. Charles Schwab has already leased Harborside X.
At Newport, ongoing construction on numerous projects that have been collectively referred to as the "Newport World Business Center" is being expedited as the demand grows.
The plans call for 7 million square feet of office space. At Newport Center Office Centers V and VI, construction continues on over 1.2 million square feet of office space, which has been leased to Chase Manhattan Bank.