The Big Idea: Hedge City

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When tragedy struck the World Trade Center on September 11, elected officials, policymakers and editorialists rallied for the rebuilding of Manhattan’s financial district, urging as one that Wall Street must be revived as the engine of New York City’s economy. “Anybody who understands how integral financial services is to New York, anyone who understands the way markets operate,” said Public Advocate Mark Green before the Democratic mayoral runoff, “should know that you don’t break up Wall Street.”

On September 10, however, Green and others–including many prominent business leaders–were singing a far different tune. Reducing the city’s dependence on Wall Street, they warned, was essential to its long-term fiscal health. In fact, it was the very capriciousness of the stock market, with its boom and bust cycles, that had municipal and real estate leaders alike cautioning in recent years to make it less “integral” to the city’s fortunes.

To this end, it was only last June that the Group of 35, an influential real estate and business task force convened by Senator Chuck Schumer, unveiled a carefully crafted blueprint to create alternative business centers in Brooklyn, Long Island City and midtown Manhattan’s west side. And in 1999, Green was touting his detailed 62-page plan to develop downtown Brooklyn as the metropolitan region’s third-largest central business district by 2015.

So where does Green the Brooklyn-booster stand today? When Ferrer proposed, during the runoff campaign, to rebuild some of the office space in other boroughs, Green assailed it as “wrong and naïve.”

Ferrer said only that “while Lower Manhattan must be rebuilt to have a critical mass of finance and related industries, this is an opportunity to pursue much-needed development opportunities in the city outside Lower Manhattan, including the other four boroughs.”

But in the highly charged post-attack political climate, as Ferrer learned, it became verboten to actually talk about steering displaced businesses to the outer boroughs. Somehow a consensus emerged–cutting across all political and ideological boundaries–that Ferrer, as one Daily News editorial put it, “would spread downtown to other parts of the city . . . which would evaporate the wealth, not spread it.”

There’s no disputing the economic fallout from the WTC disaster, with the city facing a potential loss of $100 billion and 100,000 jobs. Wall Street alone accounts for 20 percent of the city’s total wages, according to the Fiscal Policy Institute. “If we don’t retain these jobs and the tax revenue that comes from them,” says Michael Schill, professor of law and urban policy at New York University, “the city will encounter significant problems in the future.”

But when the reports by Green and the Group of 35 were unfurled, neither was billed or perceived as a means to “decentralize” Wall Street–the charge that Green relentlessly hit Ferrer with during the Democratic mayoral runoff. Rather, they were meant to keep the city from losing those very same jobs. In recent years, many Manhattan businesses have been fleeing to Jersey City and outlying suburbs, in search of larger office space and cheaper operating costs. All the big financial firms–such as American Express, Morgan Stanley, and Chase–had begun moving thousands of their workers out of the city well before September 11. To stem this loss, Senator Schumer formed the Group of 35, and charged them with addressing New York City’s office shortage. Green’s earlier study took up the same concerns and focused on downtown Brooklyn as a solution.

But that was a different time and a different Mark Green. “I think it’s fair to say that the world changed on September 11,” says Jeremy Ben-Ami, a Green spokesperson, “and that our plans and strategies are now evolving to fit this new reality.”

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Since the first week of the World Trade Center disaster, firms have been scrambling to find space in New Jersey, Long Island, Westchester and elsewhere. While it’s hard to tell where everyone will be once the cleanup is finished, a few facts had emerged by late October. An October 22 analysis of long-term leases taken by firms whose buildings were damaged found that only 24 percent of the total square footage was relocated to downtown Manhattan; 26 percent was in Midtown (most took space their companies already leased or owned); and 25 percent of the total square footage was either temporarily or permanently rented in New Jersey, according to the real estate broker Tenantwise.

Both Brooklyn and Queens captured a share of displaced businesses, but only a few, says Tenantwise CEO M. Myers Mermel. Neither borough, to Mermel’s knowledge, had captured a single long-term tenant. “We’re absorbing everything we can, but there’s a fundamental difference between us and Jersey City,” says Kenneth Adams, president of the Brooklyn Chamber of Commerce, alluding to the top-of-the-line office space that is more readily available across the Hudson.

A few firms haven’t shied away from temporarily relocating to the boroughs. MetLife started moving 962 Manhattan workers to Queens a few weeks after September 11. But MetLife was already working in Long Island City; the firm’s plan to move another 1,000 workers there in 2004 was in the works long before the terrorist attacks on the World Trade Center. And compared to Brooklyn, Queens was much better positioned and even more open about courting displaced firms: Two days after the destruction of the twin towers, the official website of the Queens borough president, realtor-friendly Claire Shulman, was posting an extensive list of Queens realtors for businesses in need of immediate space, providing contact information and the square-footage available. “Our feeling is Long Island City is a very good place to set up shop,” MetLife spokesman John Calagna told Newsday. “It’s convenient to public transportation and it’s in New York City.”

But while it may not have the political muscle or sheer square footage of Queens, downtown Brooklyn is an especially promising location, for reasons that Green himself outlined in his report. It’s got a major anchor in the MetroTech office complex, rich academic and cultural institutions, vibrant surrounding residential communities, a burgeoning commercial district and an excellent transportation hub linking it in minutes to Wall Street.

That transit connection is Brooklyn’s biggest asset. It’s also one the city could use to keep jobs in the metropolitan area: When the Tri-State Transportation Campaign cross-referenced moving patterns of displaced firms with transportation data, they found that most firms had elected to move to “transit-connected” areas in New Jersey rather than closer but less accessible locations like Long Island and Connecticut. “Most employers,” the campaign concluded, “credited the city’s remaining ferry and rail links to Manhattan as large factors in their decisions to locate offices [in Jersey City].”

As workers continue their exodus out of Manhattan, now would seem the right time to invest in public transportation, redevelopment initiatives and office space construction in those expanded business districts the Group of 35 proposes–including Brooklyn. “You need to rebuild lower Manhattan,” says Eric Deutsch, executive director of the Group of 35, “and still make the rest of the city a viable market.”

But with emotions still raw and Washington holding all the purse strings, nobody dares suggest that federal relief aid be funneled towards economic growth in the outer boroughs. For the most part, officials across the city are presenting a united front. Adams thinks he knows why: “It’s in the city’s interest to get the most federal aid for lower Manhattan,” he says. “It’s a much harder sell for the other boroughs. And quite frankly, I don’t expect a congressman from Arkansas or Iowa to understand the needs of downtown Brooklyn.”

Thus, Brooklyn civic groups and municipal officials are lying low these days, Adams says. Nobody wants to rock the boat when the seas are so choppy and unpredictable. “My impression is that Brooklyn leaders are holding their tongues,” he says. “It’s too soon after the tragedy.”

Eventually, Adams says, it will be appropriate to push openly for alternative business districts in the boroughs. “Our attitude is for the city to get the money first,” he says, “and then we’ll step it up a notch or two. Brooklyn will ultimately play a role in the rebuilding of New York.”

Keith Kloor is a senior editor for Audubon.