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$10 Bil Attack Already Shaping Policy: Report

NEW YORK CITY-A newly released study says decentralization, diversification and higher insurance premiums are among the paradigm shifts the real estate community can expect in the wake of last week's tragedy.

By Glen Thompson | Updated on September 19, 2001

NEW YORK CITY-Increasing uncertainty regarding real estate decisions and more lease renewals in the short term will be followed by a trend toward multi-site strategies and international dispersal of headquarters, according to a new study on the aftermath of last week’s World Trade Center bombings that puts a price of $10 billion on the attacks.

According to a wide-ranging report released yesterday by real estate investment management firm Jones Lang LaSalle, “The direct losses attributable to real estate alone could range up to $10 billion.” The study estimates the immediate reduction of 25 million sf of office space with the net loss over the next year expected to exceed 20 million sf. It adds that 12.7 million sf of lower-Manhattan property has been destroyed and 2.4 million sf has been damaged or declared structurally unsound. Five million sf of property will be out of commission for a year or more while 5.7 million sf should be ready in less than 12 months, it says.

The study’s long-term outlook suggests less centralization, more multi-premise strategies and an increase in regional or international dispersal of headquarters. In the short term, the report says teleconferencing will partially replace travel, increased security measures will escalate management costs and insurance premiums, and under-development projects will be re-evaluated.

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