Lower Manhattan 2022 Real Estate Year In Review

2022

LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW

LOWER MANHATTAN REAL ESTATE YEAR IN REVIEW

EXECUTIVE SUMMARY

Lower Manhattan’s steady — if slow — recovery from the Covid-19 pandemic continued in 2022. A year that began under the cloud of last winter’s Omicron wave ended on a far more positive note with foot traffic rebounding, tourists returning in substantial numbers and a raft of exciting new retailers opening their doors. Monthly pedestrian counts increased 79% over the course of the year and transit ridership (while still below 2019 numbers) has rebounded significantly. Most global travel restrictions were lifted in 2022 and visitorship appears to have steadily increased through the year, buoying the hospitality sector. Entrepreneurs have taken advantage of a soft retail leasing market to open new eateries and retailers catering to Lower Manhattan’s affluent and growing residential population. Many restaurants and bars have reported a substantial increase in revenue over the 2022 holiday season.

Steep challenges remain. Commercial vacancy rates are at record highs, with overall vacancy above 22% across all Manhattan office markets. Overall leasing totals increased over 2021 but remain well below the five-year average. Though workers returned to offices in steadily increasing numbers as Covid concerns diminished, it has become clear that hybrid/flexible work schedules are a durable change across a range of industries. Despite the presently-declining Covid

infection numbers, high inflation, rising interest rates, mixed economic signals and war in Europe have contributed to an unusual degree of macroeconomic uncertainty.

Office Leasing Improves, But Vacancies Mount

Leasing activity continued to recover from the worst months of the pandemic, with total leasing activity outpacing 2021 by 12% and doubling the totals seen in 2020. However, leasing activity remains sluggish and uneven. Some of the largest leases signed in 2022 were renewals or moves within Lower Manhattan, and new leases were concentrated in Class A properties with new and amenity-heavy space. After two years of uncertainty, the returnto-office picture became clearer in 2022. Hybrid work schedules appear to be increasingly standard practice. Office occupancy stabilized in the second half of the year as many buildings have reported much higher attendance mid-week.

Overall vacancy rates have remained stubbornly high. Vacancy numbers in some older properties and in certain Lower Manhattan geographies are substantially higher than the overall rate. The office market appears increasingly bifurcated, as buildings located further from transit and lacking in amenities have had trouble attracting tenants. That said,

smaller tenants have started to take advantage of advantageous lease terms and some properties have reported increasing interest.

Retail and Hospitality Sectors Recover And Reimagine Themselves

The near-universal lifting of travel restrictions and Covid-related entry requirements in 2022 has helped boost visitorship to the city. Tourism numbers had already rebounded significantly in 2021 and while final data is not yet available for 2022, it is expected that the upward trend in tourism accelerated in 2022. In the final quarter of the year, hotel occupancy in Lower Manhattan was up 26% year-over-year, outpacing the citywide average and falling only 9% below the same period in 2019. New hotels opened in 2022 and the district now boasts more rooms than it did prior to the pandemic.

The pace of retail openings in 2022 significantly exceeded that of 2019. Lower Manhattan’s dynamic food scene continued to grow with the addition of Jean Georges Vongretchen’s Tin Building at the Seaport, as well as several other eateries from noted chefs. Longanticipated openings, including the new Urbanspace food hall at 100 Pearl, came into fruition. Creative uses for some of the neighborhood’s unique retail spaces, such as the immersive art experience Hall des Lumières, also opened to popular acclaim in 2022.

Residential Market Rebounds

Strong demand continued to shape Lower Manhattan’s residential market in 2022. Rental prices have surged to new highs, though increasing interest rates slightly cooled residential sale prices. Major new projects finally debuted, including One Wall Street and 7 Dey Street, which contains some of the first new affordable housing built in Lower Manhattan since the pandemic.

This year showed a continued appetite for office-toresidential conversions, with large properties like 55 Broad Street and 25 Water Street inking deals to convert and add a potential new 2,640 units to the neighborhood’s residential inventory. Several other large office buildings, including 85 Broad Street, are also being considered for residential conversion.

Performing Arts Center Nears Completion

The long awaited Ronald O. Perlman Performing Art Center at the World Trade Center neared completion in 2022 and is slated to open to the public later in 2023. The 110,000 sq. ft. cultural center will be a major addition to Lower Manhattan’s arts scene and is expected to attract new visitors to Lower Manhattan.

Other ongoing infrastructure projects included improvements to Water Street and further enhancements to NYC’s ferry service, which has expanded Lower Manhattan’s already extraordinary transportation network.

COMMERCIAL LEASING

Leasing Activity Improves but Remains Sluggish

In 2022, Lower Manhattan’s office market continued to recover from the long shadow of the Covid-19 crisis. Lower Manhattan leasing activity totaled 3.13 million sq. ft. — 12% higher than in 2021 and 38% above the record low set in 2020. While yearly leasing totals have improved markedly since 2020, they remain 29% below the five-year annual average. Downtown saw uneven quarterly leasing in 2022. The first quarter recorded the second highest quarterly total since the onset of the pandemic, but stalled in the spring before picking back up in the fall. Fourth quarter leasing activity declined by 8% from the third quarter and came in 25% below the five-year quarterly average as macroeconomic uncertainty continues.

After a year of slow but steady recovery in 2021, last year started with a new round of disruption and delayed return to office plans due to the spread of the Omicron variant. The office market and broader economy have remained unsettled amid high inflation, rising interest rates and fears of a potential recession. A post-pandemic “new normal” characterized by hybrid work schedules and leasing concentrated in new, amenity rich buildings was evident throughout 2022.

Office occupancy remains persistently lower than it was pre-pandemic, with the entire New York metro area reaching an annual peak of 49.6% at the end of November, according to data from Kastle Systems. Office occupancy is substantially higher midweek (TuesdayThursday), reflecting the widespread adoption of more flexible work schedules. Research conducted by the Downtown Alliance in the fall of 2022 indicates that some properties (particularly newer buildings located close to transit) have seen higher midweek occupancy. Indeed, in the week following Labor Day, One World Trade Center recorded 68% occupancy, and occupancy across the Brookfield Place campus was more than double the level seen in 2021.

Leasing declined across all Manhattan office markets in the fourth quarter. The sharpest decreases occurred in Midtown and Midtown South, which recorded 44% and 38% lower quarterly activity, respectively, while Lower

Lower Manhattan Annual New Leasing Activity, 2017-2022

Source: CBRE

3.13

Million Sq. Ft. Of New Leasing Activity in 2022 — 38% Higher Than The Record Low Set in 2020

Manhattan leasing activity fell by only 8%. Leasing activity fell below the five-year quarterly average in all three Manhattan office markets, with Lower Manhattan recording a decline of 25%, while Midtown saw a decline of 32% and Midtown South saw a decline of 17%.

Midtown’s annual leasing totals were 6% below the fiveyear annual average at 14.81 million sq. ft.. Technology, advertising, media and information (TAMI) sector tenants were the leading drivers of leasing, accounting for 38% of all Midtown activity in the fourth quarter. Midtown South saw a slump in leasing activity with 1.6 million sq. ft. in the fourth quarter — 38% below the third quarter and 17% below the five-year quarterly average. Annual leasing, however, totaled 5.27 million sq. ft., up 5% from the five-year annual average.

Flight to Quality Persists Amid Wider Economic Uncertainties

Though new leasing is increasing, the market remains soft and fragmented. Many office tenants are delaying leasing decisions as uncertainty around macroeconomic conditions persists. Where leasing activity has remained strong, it is increasingly driven by Class A towers, as the flight to quality trend persists. Tenants are increasingly leasing smaller spaces located in newer buildings with robust amenities and updated building systems.

Owners of newly-built or amenity-rich buildings are reaping the benefits of this trend. The World Trade Center campus, Brookfield Place and newly-renovated properties have benefited the most in Lower Manhattan. Meanwhile, direct and sublet vacancies have mounted in the Financial East (roughly east of Broadway, South of Liberty Street) and Insurance (roughly east of Broadway, north of Maiden Lane) subdistricts. Key leases signed in 2022 in Lower Manhattan best reflect this trend, with these companies relocating from outside Lower Manhattan, moving within the neighborhood and/or taking sublease space.

• Freshfields Bruckhaus Deringer, a law firm, signed a 179,724 sq. ft. deal to relocate from 601 Lexington Avenue in Midtown to 3 World Trade Center. Freshfields significantly expanded its footprint in the move, upgrading from its former 110,000 sq. ft. offices.

• The Metropolitan Jewish Health System (MJHS) signed a 30-year lease for 138,374 sq. ft. at 55 Water Street. MJHS consolidated several locations around NYC, decreasing its total footprint by around 20%.

Lower Manhattan Top Leases, 2022

Source: Downtown Alliance, CBRE, JLL, Colliers International, CoStar

• Jane Street Capital expanded by 129,762sq. ft. at 250 Vesey Street in Brookfield Place. Jane Street now occupies 361,000 sq. ft. across six floors in the building. The significant expansion moved the firm into the top 20 ranking of Lower Manhattan’s largest private sector firms;

• Luxury fashion designer Alexander Wang announced it is moving its global headquarters to 46,000 sq. ft. at the Fulton Market Building in the Seaport;

• Vibrant Emotional Health, a mental-health services nonprofit, moved within Lower Manhattan from 50 Broadway to 59,550 sq. ft. at 80 Pine Street.

• New York Life took 47,355 sq. ft. of sublet space from Conde Nast at One World Trade Center. New York Life relocated within Lower Manhattan, downsizing from its previous 54,000 sq. ft. offices at 120 Broadway. New York Life’s sublease brought One WTC to 95 percent leased.

• Project management software firm Asana expanded by 44,100 sq. ft at 3 World Trade Center, taking a floor of sublet space from Uber;

• Private equity firm Motive Partners expanded by 43,285 sq. ft. at 7 World Trade Center;

• Scale Facilitation, an Australia-based consulting firm, signed a 36,099 sq. ft. lease to open a coworking and networking center for veterans and other first responders at One World Trade Center;

• Fiserv, which recently moved to One Broadway, signed a 38,772sq. ft. expansion; and

• Brookfield Properties expanded by 42,777 sq. ft. at 225 Liberty Street in Brookfield Place.

Renewal Volume Declines

Throughout 2022, there were 466,000 sq. ft. of lease renewals. Renewal activity fell 68% below 2021 levels as many tenants allowed their leases to expire, particularly in Class B and C buildings. In the five years preceding the pandemic, renewals were about 20% of total leasing velocity (new leasing plus renewals). In 2020, renewals began to take a greater share of total velocity — 45% in 2020 and 35% in 2021. In 2022, however, renewals only accounted for 13% of leasing velocity. Tenants who did renew their leases were largely in Lower Manhattan’s legacy industries and/or already located in Class A properties, and these were generally the largest deals among the renewals that occurred. Among the largest were:

• The Manhattan District Attorney’s Office renewed its 112,526 sq. ft. offices at 250 Vesey Street in Brookfield Place;

Lower Manhattan Top Relocations, 2022

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• Tech firm Celonis renewed and expanded its footprint by 75,538 sq. ft. at One World Trade Center;

• Berkshire Hathaway renewed its 68,732 sq. ft. lease at 85 Broad Street;

• Insurance company AXA Equitable renewed its 56,043 sq. ft. lease at 225 Liberty Street in Brookfield place;

• Capstone Investment Advisors renewed its 51,445 sq. ft. lease at 7 World Trade Center;

• King’s College renewed its 46,082 sq. ft. lease at 52 Broadway, downsizing from its former 81,350 sq. ft. space;

• New York State Division of Licensing Services renewed its 45,350 sq. ft. lease at 123 William Street;

• The CUNY Center For Worker Education renewed its 44,985 sq. f.t lease at 25 Broadway;

• The New York State Court of Claims renewed its 43,769 sq. ft. lease at 26 Broadway; and

• Mansueto Ventures, which publishes Fast Company and Inc., renewed its 40,000 sq. ft. lease at 7 World Trade Center.

Vacancy Rates Reach Record Highs Across Manhattan

According to Cushman & Wakefield, Lower Manhattan’s overall vacancy rate continued to rise as 1.1 million square feet of office space was added to the market in the fourth quarter. Overall vacancy stood at 22.7%, up 0.5% from last quarter and 1.6% year-over-year. This is the highest overall vacancy on record. Across office-class types in Lower Manhattan, Class A vacancy rose from 21.3% in the fourth quarter of 2021 to 22.7% by the end of 2022. The class B vacancy rate was 24.5%, up 2.1% year-over-year.

Despite improvements in leasing activity, the addition of new direct and sublease spaces being made available downtown has outpaced new leasing. Downtown submarkets with concentrations of new or upgraded buildings have fared better than those featuring a larger stock of older properties. Lower Manhattan now contains two submarkets with vacancy rates above 30 percent: the Financial West submarket (roughly west of Broadway, south of Liberty Street) has seen overall vacancy rates grow to an enormous 34.2%, a 7.3% increase over the past year — the highest vacancy among all Manhattan submarkets. In the Insurance District (roughly east of Broadway, north of Maiden Lane), vacancy rates grew to 31.5%, up 0.9% from last year.

The World Trade submarket (primarily the WTC campus and Brookfield Place complex), by contrast, has seen overall vacancy rates fall over the last year by 1.2% to 18.1%.

While Lower Manhattan’s vacancy rate remains the highest in Manhattan, the borough’s other markets are also experiencing unusually high vacancy. Both overall and Class A vacancy rates rose above 21% across all Manhattan office markets at the end of 2022. Midtown’s overall vacancy rate increased over the past year from 20.4% to 22.1% Class A office vacancy in Midtown rose to 21.6% as 10 large blocks greater than 100,000 sq. ft. became available; class B office vacancy also increased slightly to 23.4%. Within Midtown, the Penn District/ Hudson Yards submarket saw the greatest increase in vacancy over the past year.

Midtown South’s overall vacancy increased slightly to 22.2%, driven by added spaces in the Chelsea and Greenwich/NoHo submarkets. Class A office vacancies in Midtown South also saw increases to 22.7%, largely due to the addition of the newly-built 341 Ninth Avenue to the market. Class B office vacancy hit 23.5%, down slightly from late 2021. In total, direct vacancy has increased by nearly 12% since the pandemic began.

Hybrid Work Emerges as the New Normal

The remote work revolution has led to dramatic changes in who is downtown on any given day, with obvious consequences for commercial property owners and retailers. When the pandemic began in mid-2020, the vast majority of Manhattan’s office based employers adopted some form of remote work. When vaccines became widely available in 2021, employees slowly began to return to offices. Office occupancy appeared to be steadily increasing in 2021 until the arrival of the Omicron variant in December, which forced many employers to return to remote work. As the Omicron wave subsided in the first quarter of 2022, office occupancy began to pick up again.

Commentators have speculated over the last two years about a range of scenarios for the so-called “future of work,” but it now appears likely that some form of hybrid/flexible scheduling will become standard across many office-occupying industries. According to Kastle Systems, the second half of 2022 showed New York City office occupancy rates reaching their highest levels in the post-pandemic era. In the weeks following Labor Day, midweek office occupancy reached the mid-to-high 40% range, and occupancy rates have remained at this level. Occupancy in the New York metropolitan area reached an annual peak of 49.6% in late November, according to Kastle.

A Partnership for New York City survey of leading employers found the share of fully remote workers dropped from 28% in April to 16% as of mid-September. The survey results indicated that 77% of employers plan to maintain a hybrid office schedule and that 55% of employees are in the office at least three days a week. The survey projected office occupancy to climb to 54% by January 2023. While many remain remote or hybrid, several Lower Manhattan office tenants have committed to a five-day return to office schedule. Goldman Sachs, for example, brought back employees to their 200 West Street offices five days a week beginning in the fall.

Lower Manhattan’s 30 Largest Private Sector Tenants In 2022

Source: Downtown Alliance, CBRE, CoStar

Overall Vacancy Rates By Submarket

Source: Cushman & Wakefield

Lower Manhattan Office Asking Rents Continue to Inch Downward

A bifurcation in asking rents emerged over the last year, with rent in Lower Manhattan lagging behind the growing prices seen in Manhattan’s other office markets. Both overall and Class A asking rents continued to inch down for the fifth consecutive quarter in Lower Manhattan. Rents in Midtown rose over the fourth quarter, reaching parity with Midtown South at around $76.

According to Cushman & Wakefield, Lower Manhattan’s overall average asking rent fell by .04% to $55.87per sq. ft. — the fifth consecutive quarter during which pricing has fallen below $60. Class A asking rents fell by 4.6% over the quarter to $58.98 per sq. ft. — marking the lowest price since Q4 2014. Rents fell throughout most of the year, largely driven by sharper asking rent declines in Class A buildings. Class B average asking rents inched down by 0.4% over the past quarter to $51.95. Asking rents hit a peak in late 2018, when average overall rents were nearly $64 and average Class A rents were almost $68 per sq. ft..

Overall and Class A office rents in Midtown grew over the past quarter to $76.2 and $82.93, respectively, driven largely by the newly-built 66 Hudson Boulevard coming onto the market. Rents in Midtown South have seen strong growth, as tenants have continued to seek out space in new and boutique properties. Overall asking rents rose a

Overall Asking Rents By Submarket

Source: Cushman & Wakefield

dramatic 8.4% from the previous quarter to $76.70 per sq. ft., and Class A rents in Midtown South rose by 1.4% to $95.23, largely due to the completion of 341 Ninth Avenue and higher-priced space additions at 770 Broadway.

While flight to quality persisted over the last year, the formalization of hybrid work as a post-pandemic new normal and fears of a potential recession have encouraged downsizing and a shift towards smaller deals. High vacancy and competition from newer Class A properties in other Manhattan office markets has put pressure on downtown office rents. Declines in Class A rents have made these properties more accessible to firms seeking space in the highest quality buildings.

According to CBRE concessions for new leases are up 25% from pre-pandemic levels and downtown taking rents are now on average 9% below asking rents (pre-pandemic, the difference was around 5%). The average free-rent period increased to 18 months from 12 months at the end of 2019.

Largest Available Blocks of Office Space

Lower Manhattan’s largest blocks of available space are concentrated on the east side of the neighborhood, primarily along Water Street. Three buildings are entirely vacant and undergoing significant renovation, following the departure of full-building tenants Deutsche Bank, Citigroup and AIG. Though they are being marketed for lease, the three towers won’t be available to be occupied for at least another two years. In addition to the existing blocks of available office space at the World Trade Center campus, 2 World Trade Center is still awaiting an anchor tenant before construction can begin on the 2.7 million sq. ft. office tower.

According to Cushman & Wakefield, the entirely vacant office buildings are as follows:

• 60 Wall Street has 1.6 million sq. ft. available as longtime anchor tenant Deutsche Bank completed a long planned move to Columbus Circle in summer 2021. The building is undergoing a full $250 million renovation, which includes a reimagined lobby and public space, and anticipates construction to be complete in 2023.

• 111 Wall Street has over 1 million sq. ft. available following Citigroup’s consolidation to 388 Greenwich Street in December 2019. The building was sold in early 2020 for $175 million. The 24-story, 1.1 million-square-foot building is undergoing a $500-million gut-renovation, which includes a new curtain wall facade, upgrades to the lobby and building systems, and installation of new amenities. The renovation is expected to be completed by 2024.

• 175 Water Street has 676,000 sq. ft. available following AIG’s relocation to 28 Liberty Street and other offices in Midtown and Jersey City in early 2022. The building was sold to 99c LLC, a boutique UK-based real estate investment firm from Vanbarton Group for a reported $252 million. 99c has announced a comprehensive repositioning plan for the building.

Not including full-building vacancies, properties with large blocks available for immediate occupancy include:

• 80 Pine Street has two large blocks available: nearly 488,000 sq. ft. across nine lower floors and 201,000 sq. ft across two mid-rise floors.

• 3 World Trade Center has nearly 113,000 sq. ft. across three floors near to top of the tower;

• 110 William Street has 280,000 sq. ft. of space available after the New York City Economic Development

Corporation and the Department of Small Business Services departed for One Liberty Plaza in 2019;

• 55 Water Street has two large blocks available: 220,000 sq. ft. across six lower floors and 137,000 sq. ft. across two upper floors;

• 200 Vesey Street has nearly 222,000 sq. ft. of space available on four floors, with the departure of the Securities and Exchange Commission to 100 Pearl Street;

• 200 Liberty Street has 198,000 sq. ft. available across three lower floors;

• 250 Broadway has 194,000 sq. ft. available across seven lower floors;

• 222 Broadway has 417,000 sq. ft. available in the bottom half of the building as Bank of America/Merrill Lynch vacated their space;

• 140 Broadway has over 235,000 sq. ft. across ten floors recently given up by Brown Brothers Harriman; and

• 120 Broadway has over 146,000 sq. ft. of space available on a contiguous block at the building’s base, after the New York State Attorney General left for 28 Liberty Street.

Older Office Buildings Undergo Extensive Renovations

Since the onset of the pandemic, Lower Manhattan has seen a wave of investment in the renovation and repositioning of older office stock. Faced with high vacancy rates and competition from newer buildings, landlords have increasingly turned to building upgrades as a way to attract new tenants. In total, property owners across twelve Lower Manhattan buildings have committed $985.5 million to extensive upgrades, including the full-building gut renovations underway at 60 Wall Street, 111 Wall Street, and 175 Water Street. Other buildings with significant renovations underway or recently completed include:

• 80 Pine Street: In 2022, Rudin Management completed extensive upgrades to the building including the addition of decorative glass components, updated signage, new storefronts, and LED lighting to the exterior façades along Maiden Lane and Pine Street and the renovation of the ground floor lobby and entryways. The new ground floor configuration allows for the creation of a dedicated lobby/ elevators for a flagship tenant. Rudin also added amenity spaces and outdoor terraces on four floors of the building.

• 80 Broad Street: Broad Street Development completed a $12 million renovation that included the installation of a

new lobby, entranceway, common areas, freight entrance and mail center, and upgrades to retail storefronts. In addition, all elevator cabs and systems underwent a complete replacement and automation. New and upgraded HVAC and electrical systems were also installed, and new fire/life safety systems were added.

• 250 Broadway: AmTrust Realty is currently working on a $175 million renovation of the building’s main lobby on Broadway, and the addition of a secondary lobby on Park Place. A new escalator is also being added, which will lead to 18,000 sq. ft. of amenity space on the second floor dubbed “The Overlook,” featuring a coffee shop, lounges and conference rooms. Another 14,000 sq. ft. of basement space will become a fitness center with locker rooms, showers and two small indoor courts for basketball, squash or pickleball. In addition, the top two floors will become “executive suites,” with a 3,000 sq. ft. landscaped, wraparound outdoor terrace. When completed, the building will rebrand as “One Park Place.”

175 Water Street

111 Wall Street

60 Wall Street Rendering of New Lobby

2022 Property Sales

The property sales market was active in 2022 with $2.34 billion in closed property deals. This past year’s sales were 25% higher than last year’s ($1.875 billion), 32% above 2019 levels ($1.77 billion), and more than double 2020 levels ($959 million). Lower Manhattan recorded 15 closed transactions in 2022, one more than in 2021.

Office Sales

55 Broad Street: Silverstein Properties and Metro Loft Management purchased the 425,000 sq. ft. office building for a reported $180 million from Rudin Management. The developers announced plans to convert the 30-story property into a residential building containing 571 marketrate apartments. The conversion is expected to take three to four years to complete.

175 Water Street: In mid-October 99c LLC, a boutique UKbased real estate investment firm, purchased 175 Water Street from Vanbarton Group for a reported $252 million. The 684,000 sq. ft. building served as the headquarters of AIG until 2019, when AIG vacated the building and sold it for $270 million. The developer announced plans to reposition the building into a commercial office space geared towards fashion, arts, culture and technology tenants. Plans for the building call for the creation of gallery spaces, retail, event spaces, restaurants, a pool and more.

25 Water Street (4 New York Plaza): Developers GFP, Metro Loft Management and Rockwood Capital closed on the purchase of 25 Water Street for $250.8 million. The 1.1 million sq. ft. office building will be reclad and converted to a 1,200-unit rental building. This will be the largest officeto-residential conversion to date nationwide.

40 Fulton Street: Investor David Werner closed on the purchase of 40 Fulton Street from Vornado Realty Trust for $101 million. Vornado initially began marketing 40 Fulton in May 2022, seeking between $130 million and $140 million for the 234,553 sq. ft. office building. Vornado reportedly lowered its asking price to make it easier for a potential buyer to complete the deal amid rising interest rates.

Retail Building Sales

47 Broadway: In early April, buyer Hiu Ian Cheng purchased the 5,122 sq. ft. commercial building at 47 Broadway for approximately $12.3 million from The Riese Organization. Two vacant retail spaces in the building include the former China Chalet and T.G.I.Friday’s.

55 Broad Street

Office Condo Sales

1 Hanover Square: SomeraRoad purchased the 25,000 sq. ft. landmarked commercial condo at 1 Hanover Square for $6 million. The seller was India House, a social club and event space, that owned the building since the 1920s. The developer completed a $19 million renovation and conversion of the landmarked commercial condo into 20,000 sq. ft. of boutique office space. The renovation includes 5,000 sq. ft. of high-end amenity and conference space. Harry’s continues to own and operate its restaurant out of the basement space.

Multi-Family Residential Sales

8 Spruce Street: Blackstone closed on the purchase of the 76-story, 899-unit apartment building for $930 million from sellers Brookfield Asset Management and Nuveen. The sellers initially listed the property in November 2021, seeking over $850 million.

23 Peck Slip: REDA Holdings purchased the 36,000 sq. ft., 20-unit rental building at 23 Peck Slip for $24.5 million from seller Churchill Real Estate Holdings. The building was last purchased in 2014 for $23 million. 23 Peck Slip also contains a vacant retail space that was previously occupied by ACQUA restaurant, which closed in 2020.

14 Maiden Lane: Frank Savino purchased the 14,645 sq. ft., 10-unit rental building at 14 Maiden Lane from seller Michele Kahn for $9.5 million.

19 Dutch Street: Pontegadea Group, a real estate firm owned by ZARA founder Amancio Ortega, closed on the purchase of the 64-story, 483-unit apartment building for a reported $487.5 million from Carmel Partners. The building, which opened in 2019, traded for roughly $1 million per unit.

Hotel Sales

75 Wall Street: The Hakimian Organization sold the 253room Andaz Wall Street hotel at 75 Wall Street to Blue Sky Hospitality for approximately $85 million. The hotel portion of the building occupies the lower floors, while the upper floors contain 346 condominium units. Hakiminan still owns the residential upper floors. The hotel portion was rebranded as the Hyatt Centric.

In January, Sono Hospitality, a South Korea-based hospitality group, closed on the purchase of the 66-room Mr. C Seaport Hotel at 33 Peck Slip from the Ghassemieh family, who currently own and operate the hotel in partnership with Cipriani. Sono purchased the hotel for $60 million, or just over $900,000 per room. The hotel will no longer operate under the Mr. C brand.

Mixed-Use Sales

112-113 South Street: The Fogliano family sold a portfolio of two loft-style commercial buildings spanning 10,400 sq. ft. at 112-113 South Street to a private investor for $4 million. The buildings, which have been vacant since 2005, were listed in Feb. 2021 for $5,995,000.

25-27 Peck Slip: REDA Holdings also purchased the 10,635 sq. ft., 6-unit building at 25-27 Peck Slip for $8.65 million from seller Peck BZ. The building contains four residential units and two retail spaces.

80-88 West Broadway: 6R Group purchased a five-building portfolio located at 80-88 West Broadway (aka 70-74 Warren Street) for $36.1 million from seller Mark Jaffe. The portfolio contains six retail spaces, 17 rental apartments, and a parking lot. Retailers currently open in these spaces include Homemade by Miriam, JR Sushi, AKS Eyecare, The German School of Manhattan and a Western Union.

105 Washington Street: The Center for Urban Community Services, a homeless-services provider, purchased the vacant 23,030 sq. ft. building from seller 105 Washington Development for approximately $12.9 million. The Center for Urban Community Services plans to convert the building into a “safe haven” shelter for up to 84 clients, offering primary care, nursing, psychiatric services, security and consultation with social workers.

Land & Development Sites

80 South Street: The development site went into receivership after Chinese developer Oceanwide Holdings defaulted on a reported $165 million loan. Ownership of the property was transferred to Kalo, an insolvency and restructuring firm. Oceanwide initially purchased the property from Howard Hughes Corporation for $390 million in 2016 with plans to build a supertall 1,500 foot tower. Oceanwide attempted unsuccessfully to sell the property last year for approximately $200 million.

Retail Openings Surpass Pre-Pandemic Levels

The pace of retail openings substantially outpaced 2021 and in fact exceeded pre-pandemic levels, with over 150 retailers opening in 2022. For comparison, 93 retailers opened Lower Manhattan in 2021 and 105 opened in 2019. Nearly two-thirds of the openings were food and beverage operators. Many retailers that opened in 2022 were long-awaited, major new additions to the Lower Manhattan market. They include:

• The Tin Building by Jean-Georges opened in late summer featuring two gourmet grocery stores, 12 restaurants and four bars offering a variety of cuisines and service types ranging from full-service to fast-casual dining;

• Urbanspace food hall opened at 100 Pearl Street, featuring 16 different vendors offering a variety of cuisines ranging from pizza and burgers to Taiwanese, Greek and Puerto Rican. Urbanspace doubles as a block-through walkway at the base of the 27-story office tower. The 15,000 sq. ft. space was formerly an open-air arcade that was enclosed and redesigned following a 2017 rezoning measure intended to bring more life into little-used plazas and arcades in the Water Street corridor;

• Kim’s Video, the famous independent movie rental store from the East Village, reopened in the Alamo Drafthouse at 28 Liberty Street;

• Hall des Lumières, an immersive digital arts center, opened in the 28,000 sq. ft. landmarked former Emigrant Industrial Savings Bank hall at 49 Chambers Street. Hall des Lumières is a partnership between Culturespaces, a museum and art center operator, and IMG, which manages fashion and media events.

• Le Gratin, a new French restaurant featuring Lyonnaise cuisine and helmed by chef Daniel Boulud, opened in the Beekman Hotel in the former Augustine space;

• La Marchande, a French restaurant led by chef John Fraser, opened at the new Wall Street Hotel at 88 Wall Street.

• Life Time Fitness, a high-end gym, opened a 74,000sq. ft.. sq. ft location at One Wall Street.

• QC NY Spa debuted on Governors Island. The 74,000-sq.-ft. facility includes luxurious day spa amenities, including outdoor pools with skyline views of Lower Manhattan;

• Gitano Island, the Tulum-inspired Mexican restaurant, also opened on Governors Island in early July, The 27,000 sq. ft. venue features a mezcal bar, two dining patios, and a state-of-the-art DJ tent centered around a water feature

• Trinity Boxing Club opened a 4,500 sq. ft. flagship venue at 20 Vesey Street in the space once temporarily occupied by The National September 11 Memorial Museum. Trinity Boxing first opened at 110 Greenwich Street in 2004 and moved to Duane Street in Tribeca in 2014.

A few notable Lower Manhattan retailers that were thought to have permanently closed during the pandemic reopened or announced plans to reopen. They include:

• Manhatta reopened its penthouse restaurant at 28 Liberty Street in March, shifting towards a more bar-focused menu;

• Blue Ribbon Federal Grill reopened as Blue Ribbon Sushi Bar & Grill at 84 William Street,

• Racines wine bar at 94 Chambers Street reopened as Chambers in May; and

• Century 21 will reopen its flagship department store at 22 Cortlandt Street in Spring 2023, in partnership with Legends Hospitality. Century 21 will shrink its footprint to 100,000 sq. ft. over four floors from its previous 200,000 sq. ft..

Shopping Complexes Expand Their Offerings

Across Lower Manhattan’s three shopping centers, there were several notable openings and announcements, as well as closures:

• Westfield World Trade Center: Nine retailers opened in the Oculus including a long-stalled Duane Reade and The Canvas, a boutique featuring independent fashion brands. The Canvas also opened an events and gallery space on the lower concourse in the former Lacoste and Victoria’s Secret spaces. Fourteen retailers closed including Starbucks, Lacoste, REISS, and Sketchers. At Gansevoort Liberty Market 11 new casual eateries opened — Sal Anthony’s,

T Brasserie at The Tin Building by Jean Georges

Momo, Chick n Buns, K-Pop Haus, Cebichelsea, Los Panchos, Buon Cibo, Umai Fish, Two Geese Bakery, Auntie Anne’s / Jamba Juice, and Sammy’s Taqueria — all replacing eateries that closed during the pandemic. Auntie Anne’s also opened a second location in the upper concourse.

• Brookfield Place: Plaza M Spa opened, as well as MahZe-Dahr Mediterranean and Ani Ramen in Hudson Eats. Five retailers closed, including Peloton, Cicci di Carne, and clothing stores Vince and Hickey Freeman.

• The Seaport: In addition to the Tin Building, two notable new restaurants opened in the Seaport over the past year: famed Brooklyn-based pizzeria Di Fara opened a new location at 108 South Street, and Casa TuLum, an upscale Mexican restaurant, opened at 229 Front Street. Other retailers to open in the Seaport include She is Cheval, a women’s clothing store; The Canvas, a fashion boutique featuring independent designers; MCM Coffee; H.I.I.T. THE DECK boxing gym; and Wisdom Candles & More. Upcoming additions to the Seaport include The Lawn Club, an indoor venue for lawn games like bocce and croquet; and a new restaurant helmed by Wylie Dufrense and Josh Eden. Both will open in the Fulton Market Building.

Retail Coming Soon

Looking forward, there are a few key retailers and attractions are anticipated to open this year, including:

• Printemps, a luxury French department store, announced in September that it will open its first US location at One Wall Street in spring 2024. The store will span 54,365 square feet over two levels with a 346 linear foot facade on Broadway at the corner of Wall Street. This space includes the landmarked Red Room, one of only 50 interior landmarks in New York City.

• Sixpoint Brewery is set to open a 7,500 sq. ft. taproom in Brookfield Place at 200 Liberty Street in late 2023. The location will also include a 2,500 sq. ft. outdoor beer garden.

• CompletePlayground, a nonprofit family activity center, will open a 40,000 sq. ft. facility at 30 Broad Street in the former New York Sports Club space. CompletePlayground offers programming for children through classes in gymnastics, martial arts, rock climbing, dance and other activities.

Aftershocks of the Pandemic Affect Retail Closures

The ongoing effects of the COVID-19 pandemic created significant uncertainty in the Lower Manhattan retail landscape. Many businesses announced temporary closures at the beginning of the pandemic, and throughout 2021 it remained unclear which would eventually reopen. 2022 saw a wave of these retailers close permanently. 160 retailers closed permanently in 2022, approximately double the number to close in 2021. A significant number of these had been expected to eventually reopen, but were unable to do so. In this light these closures can be considered in tandem with the 163 that closed in 2020, thus providing a full accounting of the effects of the pandemic on retailers in Lower Manhattan. Of the permanent closures, approximately 46% were restaurants/ bars, 34% shops and 20% personal/business services. Notable closures include:

• Mulberry & Vine closed at 73 Warren Street due to a sharp drop in daily office workers;

• Dark Horse bar (formerly known as 17 Murray) closed at 17 Murray Street;

• The Patriot Saloon closed at 110 Chambers Street. It was named one of NYC’s great dive bars by Grub Street;

• Homemade by Miriam closed at 74 Warren Street;

• Greenwich Street Jewelers left its 64 Trinity Place location after 45 years to move to Tribeca; and

• Bobby Van’s closed after 16 years at 25 Broad Street.

Asking Retail Rents Continue to Fall

According to the Real Estate Board of New York’s fall 2022 retail report, asking rents for ground-floor retail along Broadway (Battery Place to Chambers Street) ranged from $235 to $600 per square foot and averaged $283 per square foot — down 28.4% from 2021. Asking rents in other parts of the district are often considerably lower than the prime Broadway locations surveyed by REBNY. Lower Manhattan retail rents have declined as it has become harder to lease to businesses that cater to weekday office workers, who have continued to work remote or hybrid schedules. Average rents along Broadway fell to their lowest rate since spring 2015.

SAGA at 70 Pine Street

Hall des Lumières

Retailers Benefit as Pedestrian Activity and Transit Ridership Rebound Throughout the Year

Monthly pedestrian counts in Lower Manhattan increased considerably throughout the year. Though 2022 began with suppressed activity due to the Omicron variant, with a recorded 2.7 million pedestrians in January, foot traffic increased to 4.7 million pedestrians in April and continued to improve gradually throughout the spring and summer. Lower Manhattan recorded a peak monthly total in September, reaching a post-pandemic high of 5.3 million pedestrians. Pedestrian volumes during the winter holiday season rose 20% above 2021 levels, with December recording 4.8 million pedestrians in Lower Manhattan. Growing tourism, warmer weather and stabilizing midweek office occupancy are driving weekday traffic and contributing to a busier feel on the streets.

Subway and ferry ridership also rebounded significantly in 2022. Fulton Street, Lower Manhattan’s largest and most heavily-used station, saw over 14.6 million riders last year, up 66% from 2021 levels. Monthly total ridership at Fulton Street surpassed 1 million riders in March — for the first time since 2020 — and remained above 1.2 million throughout the rest of the year. Nearly 1.4 million riders passed through Fulton Street in October, marking the busiest month for the station since the onset of the pandemic. Ferry ridership at Wall Street/Pier 11 rose 55% above 2021 levels to 1.9 million ferry riders, marking another post-pandemic peak, as tourists returned in large numbers to the popular service and New Yorkers responded enthusiastically to expanded summer service to the Rockaways and year-round access to Governors Island.

Le Gratin

HOTEL + TOURISM

Tourism Begins to Rebound

Lower Manhattan welcomed 5.7 million tourists in 2021 as domestic travel began to resume and international travel restrictions eased.1 While still far below 2019’s 14 million visitors, 2021’s tourism number was nearly double the visitation seen in 2020. The share of international visitors steadily increased to 28% and rebounded further throughout 2022. Traditional western European markets and Canada have rebounded significantly in 2022 after travel restrictions were lifted in late 2021.

Nearly 33 million visitors came to New York City in 2021, less than half the record total for 2019, but still up from 22.3 million in 2020. Looking forward, NYC & Company forecasts that international travel will triple its 2021 volume in 2023 and domestic travel will exceed pre-pandemic levels in 2023. While updated figures for 2022 are still being determined and are expected to be released in late February 2023, the data will likely reflect ongoing improvements from the lows of 2020.

Hotel Inventory Continues to Grow

The current hotel inventory in Lower Manhattan stands at 8,886 rooms across 42 hotels. As of the end of 2022, Lower Manhattan hotels contained over 940 more rooms than at the beginning of the pandemic. Tourism and hotel performance rebounded strongly over 2022 as governments lifted the few remaining pandemic related travel restrictions. 2022 was the first year since the onset of the pandemic in which there were no hotel closures in Lower Manhattan. Of the ten hotels that closed since 2020, five have rebranded under new management, two have reopened and two have been converted to residential use. Only the 33-room Down Town Association at 60 Pine Street remains closed. Over 480 rooms across three hotel developments opened in 2022. They include:

• The Wall Street Hotel opened at 88 Wall Street with 180 rooms. The building recently completed conversion from an underutilized office property. The hotel also features La Marchande restaurant helmed by chef John Fraser, a rooftop bar and terrace called Tontine, and a private ballroom; and

• Hotel Indigo NYC Downtown - Wall Street opened at 120-122 Water Street. The 127-room hotel also includes an on-site restaurant and rooftop bar; and

• Hotel Indigo NYC Financial District opened at 50 Trinity Place. The 173-room hotel also features a restaurant and bar called Half Moon.

Two hotels containing a total of 485 rooms rebranded under new ownership last year:

• The former 232-room WhyHotel at 110 Wall Street rebranded as Placemakr Wall Street. The property was previously WeLive apartments; and

• Hyatt Centric Wall Street debuted at 75 Wall Street. The property was rebranded from the Andaz Hotel Wall Street, which closed during the height of the pandemic, after the Hakimian Organization sold the 253-room hotel to Blue Sky Hospitality for approximately $85 million in early 2022. The hotel is wrapping up a refresh akin to a rebrand, as well as a reopening of the hotel’s restaurants.

Finally, the 289-room Radisson Wall Street at 52 William Street, reopened in August after operating as a temporary homeless shelter.

Amid the recovering hospitality market, over 12,200 hotel rooms in 80 developments are planned across the city — including 1,411 rooms across seven hotels in Lower Manhattan. Three hotels containing nearly 540 total rooms are expected to open in 2023:

• The Fidi Hotel at 11 Stone Street, containing 143 rooms;

• Motel One at 133 Greenwich Street, 326 rooms (after a renovation and rebranding of the former Courtyard by Marriott Downtown Manhattan/WTC); and

• The Warren Street Hotel, a 70-room boutique hotel operated by Firmdale Hotels, at 86 Warren Street.

nother four hotels are in the early construction or planning stages, including:

• The Ned, a London-based luxury hotel and private members’ club, plans to open a 174-room hotel in the former American Stock Exchange Building at 86 Trinity Place in 2024;

• The AC Hotel at 112 Liberty Street, containing 230 rooms;

• Tempo by Hilton at 140-142 Fulton Street, containing 296 rooms; and

• The Moinian Group’s as-yet unnamed new hotel at 7 Platt Street.

Occupancy and Average Daily Room Rate Improve

Though citywide and Lower Manhattan hotel occupancy rates remain below pre-pandemic levels, positive momentum continued over the past year. The year began with depressed booking levels due to the spread of the Omicron variant, but travel and bookings rebounded strongly in the spring as most remaining travel restrictions were lifted and both business and leisure travel began to return. Hotel occupancy rates hit 79% in the fourth quarter, the highest quarterly occupancy since the end of 2019, although still 9% below pre-pandemic levels. Citywide occupancy was roughly on par with Lower Manhattan in the fourth quarter, spurred by major city events and the holiday season. Lower Manhattan’s average daily room rates grew to $324 in the fourth quarter, 15% above 2019 levels. Lower Manhattan room rates have increased with the addition of new high-end hotels opening over the past year.

Lower Manhattan Hotel Pipeline

8,886

Hotel Rooms in 42 Hotels With Another 1,411 Rooms Across 7 Hotels Planned

Source: Downtown Alliance

The Wall Street Hotel

Inventory And Development

Lower Manhattan has 34,243 units in 343 residential buildings. Nearly 5,680 units in 22 buildings are under construction or planned for development, with about 56% currently planned as rental units and 44% as condos. Two residential buildings containing 775 units opened during 2022:

• One Wall Street: Macklowe Properties is finalizing construction on the conversion of the landmarked office tower into 566 condominiums. The building contains 157,000 sq. ft. of retail, including a 44,000 q. ft.. Whole Foods and 74,000 sq. ft.. Lifetime Fitness. Printemps, a luxury French department store, announced that it will open its first US location at One Wall Street in spring 2024. The store will span 54,365 square feet over two levels, including the landmarked Red Room; and

• 7 Dey Street: developed by SL Green, the 31-story, 209 rental unit tower includes 63 affordable units and 48,000 sq. ft. of retail and commercial office space.

Later in 2023, one additional residential development is expected to wrap construction and open, bringing another 58 units onto the market:

• 1 Park Row: developed by Circle F Capital, the 100,000 sq. ft.. development at the corner of Park Row and Ann Street will yield a new 23-story, 58-unit condo tower and feature 13,500 sq. ft. of retail space. This is the last parcel along Park Row left for development after J&R Music and Computer World’s closure in 2014.

Over the next several years, three new developments containing nearly 1,240 new units are expected to finish construction, including:

• 7 Platt Street: Moinian Group is currently building a new 250-unit tower that will also contain a hotel component. 7 Platt Street is expected to finish construction and open in 2025;

• 8 Carlisle Street: North Carolina-based developer Grubb Properties plans to build a 50-story building containing 22,000 sq. ft. of ground-floor retail and 400 residential units. 8 Carlisle, which is set to receive tax abatements under the recently expired 421a program, will include a mix of affordable and market-rate rental units. 8 Carlisle is expected to finish construction in 2025; and

• 160 Water Street: Vanbarton Group is currently working to convert the 24 story, 482,000 sq. ft. office

7 Dey Street

building into a 586-unit market rate rental building. Construction is scheduled for completion by late 2025.

Two long-planned projects cleared significant regulatory and approval hurdles in 2022, though construction timelines for these projects remain unclear amid legal and funding challenges:

• 250 Water Street: in late 2021, the Howard Hughes Corporation received approvals to begin construction on its $850 million development project. The site will transform a parking lot into a 324-foot-tall building with 270 apartments (including 70 affordable units), Class A office space, retail and community space. The project will generate $50 million in funding for the South Street Seaport Museum, with $40 million generated from the Howard Hughes project and another $10 million committed by the City. The project broke ground in 2022, beginning with comprehensive remediation of the site through the New York State Brownfield Cleanup Program. In January a state Supreme Court judge issued an injunction on the project, challenging the Landmarks Preservation Commission’s decision to approve the development. The future of the project remains subject to ongoing litigation.

• 130 Liberty Street (Site 5): a partnership between Brookfield and Silverstein Properties received approval from the Port Authority and Lower Manhattan Development Corporation to develop Site 5 at the World Trade Center. The site was originally home to the Deutsche Bank building that was damaged on 9/11 and demolished in 2007; it currently serves as a Port Authority police depot and temporary plaza. The proposed 1.56 million sq. ft.. tower is estimated to have over 1,300 rental apartments, of which approximately 25% will be affordable. Plans are still not finalized, but construction hopes to commence later in the year.

5,776

Units In 17 Residential Buildings Under Construction Or In Development

Lower Manhattan Residential Pipeline

Residential Rents Set Record Highs

According to residential statistics published by Miller Samuel/Douglas Elliman, the median rent in Lower Manhattan reached new record highs in three of the four quarters in 2022. The year began with a then-record high of $4,400, but dipped to $4,000 in the summer, reaching parity with overall Manhattan rents for the first time since the onset of the pandemic. Rents spiked again in the fall, reaching $4,500, and the year ended with rents climbing even higher to $4,634. This is up 3% from the third quarter and up 10% from 2021 levels. Median rents are now 16% higher than they were in late 2019. Rental prices in the neighborhood have spiked amid limited supply, a lack of concessions and high demand, including from would-be homebuyers pushed back into the rental market by increasing interest rates. Manhattan’s overall median rent fell 2.4% from the previous quarter to $4,000, declining for the first time since the first quarter of 2021 and indicating that borough-wide rents may have hit a peak at $4,100 in the fall. Nonetheless, Manhattan-wide rents remain 14% higher than at the end of 2019.

Residential Sales Volume Falls Amid Rising Interest Rates

Inflation reached the highest levels in decades in 2022, prompting the Federal Reserve to raise interest rates. High inflation and increased borrowing costs led to a significant decline in the number of sales recorded in Lower Manhattan in 2022. 350 units were sold in 2022 — 33% fewer than the 520 sold in 2021, though still 29% more than the number sold in 2019. Buyers have continued to prioritize additional space, and the distribution of units sold by size has reflected this trend over the past year. Compared to 2021, the share of two-bedroom units sold increased by 7% and the share of three-bedroom units increased by 9%, while the share of studio and one-bedroom units sold fell by 9%.

The median sales price for Lower Manhattan co-ops and condos rose to a record high of $2,075,000. Median prices surpassed $2 million for the first time since the third quarter of 2020. Prices surged at the end of the year, driven largely by sales at the newly-delivered 130 William Street and 77 Greenwich Street. Lower Manhattan ended 2022 with median sales prices nearly double the Manhattan-wide price of $1.1 million.

$4,634 .

Lower Manhattan Median Residential Rent, Q1 2017 - Q4 2022

Source: Miller Samuel/Douglas Elliman

Lower Manhattan median rents set three record highs in 2022 and are now 16% higher than they were in late 2019

Lower Manhattan Median Condo Sales Price, Q1 2017 - Q4 2022

Source: Miller Samuel/Douglas Elliman

Lower Manhattan median sales prices rose to a record high of $2,075,000

Sales Volume of Lower Manhattan Condos/Co-Ops, Q1 2016 - Q4 2022

Source: Miller Samuel/Douglas Elliman

350 units were sold in 2022 — 33% fewer than in 2021.

MAJOR PROJECTS UPDATE

World Trade Center

The Ronald O. Perelman Performing Arts Center (The Perelman Center)

Construction on the Ronald O. Perelman Performing Arts Center topped out in the spring of 2021. Exterior facade work of the 4,900 marble panels wrapped in early 2022. The approximately 110,000 sq. ft. cube-shaped building will feature three theaters of varying sizes which can be combined in different seating configurations and formats for an array of unique performance environments. The project is anticipated to open later in 2023.

St. Nicholas Greek Orthodox Church and National Shrine

The Santiago Calatrava-designed St. Nicholas Greek Orthodox Church and National Shrine opened to the public in early December. The original church was destroyed on September 11, 2001 and construction lasted for more than 20 years as a result of funding delays. The $95 million structure also includes office space on the second and third floors and several community rooms.

Site 5

A partnership between Brookfield and Silverstein Properties received approval from the Port Authority and Lower Manhattan Development Corporation (LMDC) to develop Site 5 at the World Trade Center, also known as 130 Liberty Street. The site recently served as a Port Authority police depot and the southernmost area continues to serve as a temporary public plaza.

The proposed 1.56 million-sq.-ft. tower is expected to include approximately 1,300 rental apartments, of which at least 25% will be affordable. LMDC approved an override to city zoning rules in order to build a tower larger than local regulations allow. Construction may commence later in the year.

9/11 Tribute Museum Closes

The 9/11 Tribute Museum closed at 92 Greenwich Street in mid-August due to low visitation following the pandemic. The Museum, which originally opened in 2006, will continue to offer educational programming online, and artifacts will be transferred to the New York State Museum in Albany.

Pace University

In December Pace announced plans to renovate One Pace Plaza, adding new academic spaces, a modernized residence hall and a new performing arts center. The renovation will include the reconstruction of the lower floors of One Pace Plaza East and upgrades to the dormitory building at 182 Broadway. Construction is expected to start in the fall of 2023 and be completed in early 2026.

Construction continues on Pace’s new, 215,000 sq. ft. tower (which will be known as 15 Beekman Street) that will house a residence hall, dining facility, library and academic and classroom spaces. Construction on the new tower began in early 2021, with occupancy planned for fall 2023. The new tower replaces two buildings at 126-132 Nassau Street and 15 Beekman Street that are now demolished. The new building will serve as a replacement for Pace’s 50-year-old tower at One Pace Plaza East. 15 Beekman Street will be the third property SL Green has built for Pace in the neighborhood. The developer previously built dorm buildings at 33 Beekman Street in 2015 and 180 Broadway in 2013.

Infrastructure NYC Ferry Adds Capacity

In early 2022, the NYC Ferry began daily service to Governors Island via the South Brooklyn Route, expanding direct access from Pier 11/Wall Street. Daily ferry service to Governors Island also continues via the Battery Maritime Building. The added ferry service to Governors Island coincided with the Island announcing it will be open year round. Previous plans to add a new Coney Island route connecting southern Brooklyn to Pier 11/Wall Street have been halted as the NYC Economic Development Corporation, which oversees the NYC Ferry, reassess environmental concerns related to the location of the dock.

Expanding Ferry Service to New Jersey

In the fall NY Waterway announced the upcoming opening of a new passenger ferry route along the Raritan Bay connecting South Amboy, NJ to Brookfield Place. An official launch date has not yet been determined.

Street Reconstruction

St. Nicholas Greek Orthodox Church

Reconstruction of Front Street between Old Slip and John Street began in January 2020 and is scheduled for completion in Fall 2023. Greenwich Street reconstruction, between Barclay and Chambers Streets, began in early 2022 and will be completed in November 2024; the adjacent sidewalks at 240 Greenwich Street will also be redone in tandem. Vesey Street reconstruction, between Church Street and Broadway, began in September 2022 and will be completed in September 2024. Nassau Street reconstruction, between Pine Street and Maiden Lane, will begin later in 2022. These projects, each lasting two years, will replace all underground infrastructure, including water mains, sewers, electric, gas and other utilities, as well as construct new streets and curbs.

Water Street Streetscape Improvements

The city began work on the streetscape and public-realm enhancement project along the Water Street corridor in May 2021 which is estimated to be completed in 2024. The $22.8 million project will transform two temporary public plazas at Coenties Slip and Whitehall Street into permanent public spaces, featuring new landscaping, seating and concessions. The project will also plant street trees, rebuild sidewalks and enhance pedestrian safety from Whitehall Street to Old Slip.

Parks and Open Space Wagner Park

In July the Battery Park City Authority (BPCA) closed Wagner Park to begin work on the $221 million South Battery Park City Resiliency Project. Plans for the project call for the demolition and reconstruction of Wagner Park and the Wagner Park Pavillion, ultimately elevating the park by 10 feet and installing flood walls, berms and other resiliency infrastructure from the Museum of Jewish Heritage through Wagner Park and Pier A, moving along Battery Place over to Bowling Green Plaza. In December a state Supreme Court judge issued an injunction following a lawsuit arguing that the BPCA failed to consider less expensive and invasive alternatives. Work has halted and the park remains closed pending the BPCA’s appeal of the ruling.

Climate Resiliency Resilient Infrastructure

Work continues on parts of the Financial District and Seaport Climate Resilience Master Plan, a resilient infrastructure plan released in 2021 to protect Lower Manhattan from future flooding. The master plan is part of the larger Lower Manhattan Coastal Resiliency strategy, with active capital projects in Battery Park City, The Battery and Two Bridges. The plan calls for the creation of a two-level waterfront park that extends the shoreline of the East River by up to 200 feet.

The upper level will be elevated by 15 to 18 feet to protect against severe storms, while doubling as public open space. The lower level will be a waterfront esplanade raised three to five feet to protect against sea level rise, while offering access to the East River shoreline. The flood defense infrastructure is projected to cost $5 to $7 billion and could be in place by 2035, pending funding and prioritization by regulatory agencies.

Governors Island

In early 2022, the NYC Ferry also began daily service to Governors Island via the South Brooklyn Route, expanding direct access from Pier 11/Wall Street. In the summer, the Italy-based QC Terme Spas and Resorts opened QC NY, the spa’s first location outside of Europe, across three historic buildings at the northern tip of Governors Island.

In the summer the Urban Assembly Harbor School on Governors Island announced plans to expand by two new buildings, doubling its total footprint to approximately 160,000 sq. ft. across four buildings. The expansion will allow enrollment to grow from approximately 520 students to nearly 900. The expanded space will include the newly renovated historic Building 555 and a newly constructed building affiliated with the Center for Climate Solutions. The expansion will add classrooms, a competition-sized pool, a gymnasium and lab space.

Office-to-Residential Conversion Projects Gain Momentum

The persistence of hybrid work has led to mounting vacancies in Manhattan’s core office districts. These vacancies, coupled with the city’s ongoing housing shortage, have prompted city and state leaders as well as private developers to aggressively pursue office -to-residential conversion projects in order to increase supply and reinvigorate these districts as 24/7 live-work-play neighborhoods. Adaptive reuse of aging and underutilized office stock has a long history in Lower Manhattan, beginning with the 421-g tax incentive program developed by the state in the 1990s to address high vacancies through conversion, and continuing into the postSeptember 11 period, when conversions were touted as a way to help Lower Manhattan rebuild and recover from the attacks.

As Manhattan’s oldest office district, Lower Manhattan contains many older office buildings that have contributed to rising vacancy rates. Gov. Hochul and Mayor Adams are proposing a package of regulatory reforms, including lifting the 12 FAR cap on residential density, that would ease the path for conversions at many of Lower Manhattan’s larger office buildings.

Developers are already taking advantage of a soft office market and the continued attractiveness of Lower Manhattan as a residential neighborhood of choice. Several conversion projects have been announced since the beginning of the pandemic, including:

• 25 Water Street (4 New York Plaza): Developers GFP, Metro Loft Management and Rockwood Capital purchased The 1.1 million sq. ft. office building, formerly known as 4 New York Plaza, for $250.8 million and announced plans to convert the property to a 1,300-unit rental building. This will be the largest office-to-residential conversion to date nationwide.

• 160 Water Street: Vanbarton Group is currently working to convert the 24 story, 482,000 sq. ft. office building into a 586-unit market rate rental building. The conversion plan calls for the addition of five new floors and the building will be reclad with glass curtain walls. Construction is scheduled for completion by late 2025.

• 55 Broad Street: Silverstein Properties and Metro Loft Management announced plans to convert the 425,000 sq. ft., 30-story property into a residential building containing 571 market-rate apartments. The conversion is expected to take three to four years to complete.

• 85 Broad Street: a partnership between Metro Loft and Fortress Investment Group revealed plans to convert the 1.1 million sq. ft. former Goldman Sachs headquarters to rental apartments. A final unit count and construction timeline have not yet been announced.

• 17 Battery Place: Moinian Group converted 20 stories of the 940,000 sq. ft. office building to 490 rental apartments in 2001. Moinian recently announced plans to convert three more floors of the remaining office component into an additional 170 units over the next three years.

• 90 John Street: Moinian Group converted a portion of the 344,914 sq. ft. office building to 221 rental apartments in 2000. Moinian recently announced plans to convert the remaining office component to 115 new units over the next two years.

Alliance for Downtown New York 120 Broadway, Suite 3340 New York, New York 10271

The mission of the Alliance for Downtown New York is to provide service, advocacy, research and information to advance Lower Manhattan as a global model of a 21st century central business district for businesses, residents and visitors.

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