"Lower Manhattan showed strong signs of a sustained recovery last year," says Eric Deutsch, president of the Alliance for Downtown New York. The firm released its third annual State of Lower Manhattan report which covers a range of sectors including commercial, retail, residential, transportation and tourism. "Lower Manhattan has made tremendous progress, although significant challenges lie ahead."
He notes that the Downtown office market saw the largest decrease in vacancy rate of any of the eight CBDs in the country that have more than 40 million sf of commercial space. "Smaller companies are relocating to Lower Manhattan to take advantage of the area's lower rents compared to other sections of the city," says Deutsch. Numerous firms outside of Downtown's traditional finance and insurance sectors represent sectors as non-profit, media, law, education, health, and other professional services that are moving to the area.
Companies taking space Downtown fueled a drop in the vacancy rate to 10.6% in the fourth quarter of 2005 from 13.7% in the fourth quarter of 2004. Total absorption reached 1.1 million at the end of 2005, which is the first time this figure has been positive since 2000.
Accessibility is already a major advantage for Downtown as a business center, and these improvements will only increase that competitive edge, the report points out. More than $10 billion in public and private investment is currently being invested in infrastructure projects including the Santiago Calatrava-designed PATH Station and the Fulton Street Transit Center. "Lower Manhattan experienced an influx of mid- and high-end retail in 2005," says Deutsch. "From new businesses such as BMW and Hickey Freeman, to expansion of district stalwarts Century 21 and J&R Music and Computer World, the Downtown retail market is not only growing, it's surging past other areas of the city."
Residential development has continued as well . As of year-end 2005, there were 20,617 residential units in the area south of Chambers Street. An additional 29 developments are under construction, accounting for nearly 4,000 new units within the next few years. What's more, with another 4,000 units in the planning stages.
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