Hugh Finnegan, an attorney in the real estate group at Sullivan & Worcester LLP, tells GlobeSt.com that "Lower Manhattan has slowed down because of factors beyond its control," pointing to the sub-prime crisis, the credit crunch, the general state of the economy. "The result is that the recovery will take place, it will just take longer than hoped for," he explains.

Finnegan says that the area there was beginning to transform into a more residential area pre-9/11, which, mixed with the office sector, brought "a greater energy and vitality to the area, which was good." However, he did note that the residential market has cooled a bit and the metamorphosis has slowed. "The continuation of the transition is inevitable and it will resume when the pendulum swings back in the other direction," he says. "Improvements are needed…The extension of the LIRR from Brooklyn would help."

According to the Alliance for Downtown New York, since 9/11, more than 12,000 housing units have been built since 2001, bringing Lower Manhattan's population to 56,354 by year-end 2008, more than double the pre-9/11 population. The surge in tourism in the area, is also spurring the development of new hotels in the area, including the W and the Four Seasons, which will add 3,152 rooms by 2011. Daniel Lesser, senior managing director of CB Richard Ellis' Valuation & Advisory Services and Hospitality and Gaming Group, recently told GlobeSt.com that that Downtown area continues to undergo major change and development with significant office, residential, tourist and transportation projects expected to be completed over the next five years. "The area is increasingly evolving into a 24/7 full service neighborhood with the addition of high-end high-rise residential apartments and condominiums as well as restaurants, retail and entertainment venues," he explains. "Diverse groups of office tenants have been migrating to lower Manhattan to take advantage of lower rents when compared to Midtown. Hotels are experiencing strong occupancy levels and increases in room rates that exceed underlying inflation rates."

Nick Petkoff, director of sales in the Financial District and Tribeca at Massey Knakal Realty Services, says that Downtown is "well-positioned to weather the storm." He adds that "while the economy has recently slowed and Wall Street seems more somber, downtown still holds its own with other areas of Manhattan," noting that analysts mostly fear that developers or converters "will not be able to finance their projects and that an increase in the vacancy rate of office buildings will put downward pressure on rents, which may lead to foreclosures. The Wall Street slowdown may also put pressure on retail purchases and thus, on retail rents." However, he says that while the arguments have some validity, he does not expect the slowdown to lead to a major unraveling of the building sales markets or rental prices in the next 12 months. "The promise and excitement of downtown is well and alive, we just need to dance a cautious dance for the time being."