NYC Partnership economic impact analysis update, February 2002

NYC 9/11 Public Portal Document

sophisticated use of additional government support. Just like other American cities damaged by catastrophic earthquakes or other natural calamities, New York City will need more federal aid. • Tourism and Travel. Leisure travel and business travel remain at depressed levels. Since September 11th, passenger volume on airlines has dropped 15 percent nationally. Passenger volume for the airlines at New York’s three major airports dropped more than 20 percent in the same period. During the all-important holiday season (the last quarter of2001), New York City hotels saw their revenue-per-room drop by 23 percent compared to the same holiday season in 2000. • A Sluggish Retail Sector. The recovery of New York’s retail sector continues to lag the nation, as expected. This state of affairs reflects the continued weakness in tourism, especially the drop in visits by affluent tourists from abroad, and the falloff in performance of high-end department stores and carriage-trade specialty outlets. Early estimates from a cross-section of companies suggest that retail sales in the city from September through December were 10 percent lower than those in the rest of the nation. New York’s retail performance continues to be affected by the attack. Deep discounting, which began in October and continued through the holiday shopping season, has affected profits. • Location, Location, Location. Damaged and destroyed property has been quickly restored, increasing vacancy rates and making rents more attractive to business. Manhattan rental rates fell to $45.13 per square foot in the fourth quarter of 2001, a drop of $8.30 per square foot from the comparable period in 2000. There are healthy indications that dislocated tenants want to stay in Manhattan. Tenants who occupied about 77 percent of the destroyed space have decided to stay in Manhattan. Only 13 percent have decided to relocate to New Jersey, and another 6 percent will move to upstate New York or other states, with 4 percent remaining undecided. • A Rising Vacancy Rate. In line with expectations, vacancy rates for commercial space rose to more than 8 percent in the last quarter of2001. The rise reflects declining demand, the addition of about 10 million square feet of available space after September 11th and other factors. • The Pace of Some Recovery Efforts Exceeds Expectations. Workers have completed repair and reopened more than a third of the 29 million square feet of property damaged or destroyed. Removal of debris from Ground Zero, once expected to take two years, is expected to be finished as early as June. • The Array of Public Agencies with Overlapping Jurisdiction Could Slow the Pace of Redevelopment and Economic Recovery. The logistics of developing, coordinating and executing a recovery strategy are proving to be more difficult and complicated than expected. The city, state and federal entities that have jurisdiction over redevelopment are still determining the most effective way to collaborate. • Mass Transit Challenges. People who live or work in Lower Manhattan continue to cope with much longer commutes as well as severe crowding on subways and commuter rail lines. Major repair projects are underway or about to commence. New York City Partnership and Chomber of Commerce 4

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