Downtown New York’s Residential Boom Rewrites Recovery Playbook
Lower Manhattan has added more than 24,000 apartments since 2000, nearly tripling its residential stock to over 37,000 units and helping the population grow threefold in 25 years. The neighborhood now employs roughly 230,000 workers, close to pre-9/11 levels, while the $20 billion World Trade Center rebuild created 10 million square feet of office space, nearly 500,000 square feet of retail, a transportation hub, the 9/11 Memorial and Museum, and a performing arts center. American Express broke ground in July on a 55-story headquarters, the last major development at the 16-acre site. Alliance for Downtown New York reports 23 office-to-residential conversions are planned or under construction, despite the city increasing scrutiny of such projects this summer following a near partial collapse in Midtown.
Developers converted dozens of obsolete office buildings into housing after the federal government offered new incentives following the attacks, taking advantage of prewar buildings with smaller floor plates well suited to residential use. A federally funded program provided grants of up to $14,500 to households that stayed in or moved downtown. Richard Born and Peter Levenson’s group converted 90 West Street, which was gutted when steel from the collapsing South Tower tore into it, into about 410 apartments with government financing and tax incentives. Financial-services and real-estate firms, which accounted for about two-thirds of downtown employment a quarter-century ago, now represent roughly a third, while media, technology and advertising companies including Condé Nast, Spotify, Uber and WPP Media have moved in.
The neighborhood added 36 hotels since 9/11, growing from six to 42 properties as the World Trade Center and memorial became tourist destinations. Downtown now supports a live-music scene that includes Pier 17’s 3,400-capacity rooftop venue and One Flight Up Jazz Club, plus restaurants and rooftop bars that keep Stone Street and the waterfront active after work hours. Office vacancy stood at 22% in July, higher than Midtown’s 18%, and the former Deutsche Bank site across from the World Trade Center remains undeveloped despite plans for about 1,200 apartments.
Cities including Dallas, Denver, Portland, Providence, Rhode Island, Chicago and Washington have attempted office conversions to revitalize their downtowns but have not replicated lower Manhattan’s round-the-clock activity. New York benefited from strong housing demand, an abundance of conversion-ready prewar buildings, and billions in federal aid, insurance proceeds and Port Authority funding that few other markets can match. Government incentives at times allowed companies to lease downtown office space for about 30% less than comparable Midtown space, helping attract tenants like Spotify, which signed at Four World Trade Center in 2017 before going public on the New York Stock Exchange.
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