New York City Struggles with Empty Office Space

By Pinder, Jeanne B. | THE JOURNAL RECORD, May 15, 1993 | Go to article overview

New York City Struggles with Empty Office Space


Pinder, Jeanne B., THE JOURNAL RECORD


By Jeanne B. Pinder

N.Y. Times News Service

NEW YORK _ It was once a proud building, as the gilded mosaic over one entrance testifies: An angel grasping a lightning bolt, symbol of technology's mastery over that era, adorns 67 Broad St., built to house ITT's headquarters in 1928. But now, the 33-story lower Manhattan building is three-fourths empty, the mosaic entrance is unused, and the building was foreclosed upon in January.

Across the way, at 80 Broad St., a whimsical quartet of metal seahorses hovers over the entrance of the stately 36-story building, which is 51 percent vacant.

This stretch of Broad St., at the heart of New York's financial district, is eerily serene. The overbuilding of the 1980s, coupled with the city's economic problems and a wave of relocations to newer and better-equipped buildings in midtown, has left downtown's older buildings simply desperate. It is a tale echoed in many parts of lower Manhattan, as in downtown areas across the country.

In New York, the vast swaths of empty office space pose a stark problem for the owners of older buildings, as well as for city officials. Even as the economy recovers, the downtown vacancy rate has continued to rise, and no one is sure when _ or whether _ job growth will resume, increasing demand for offices.

The optimists speak of renovations that will make the buildings desirable again, or of converting the buildings into apartments or hotels. Others say that many can never be saved, and will have to be demolished. Such decisions, it seems clear, will be based not only on job growth, but on whether owners _ with or without public aid _ can invest enough to help bring a turnaround.

"It would really be a crime to lose them," said Laurie Beckelman, chairwoman of the city's Landmarks Preservation Commission. "A number of them are architecturally significant, and they also tell the history of the development of the city, of New York as a skyscraper town. These canyons of stone shouldn't just be left to be rubble."

The problems for the city are financial as well as aesthetic.

"The City of New York stands to lose as much as half a billion dollars a year in tax collections if the decline in values continues unabated in lower Manhattan," said John H. Alschuler Jr. of Hamilton, Rabinovitz Alschuler, a policy and management consulting firm.

He said that figure represents about one-sixteenth of the city's property tax income. "The government needs to intervene constructively in order to preserve the property tax base that supports vital services needed by city residents."

For many owners, the problem is complicated by the fact that the vacancy rate is so high in the older buildings that money cannot be found for extensive renovations. This, in turn, affects their ability to rent space.

In the part of Manhattan roughly south of Chambers St. and the Brooklyn Bridge, the "secondary" or less desirable buildings _ a group that often includes unrenovated older structures _ are 25.4 percent vacant, according to Cushman Wakefield, a real estate brokerage and management company.

In the middle stretch of Broad St., a corridor anchored at one end by the New York Stock Exchange and at the other by the relatively new headquarters of Goldman, Sachs, the rate could be as high as 45 percent, the brokerage Edward S. Gordon estimates.

While the New York City figures are among the worst in the nation, other cities also face an overhang of empty space in older, less desirable buildings. In Dallas, secondary buildings are 36 percent vacant, according to Cushman Wakefield, and in Philadelphia, the figure is 27 percent.

Along Broad St., owners have not given up, despite long odds and huge costs. …

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