this is definitely good for us. Give it 5 years, skyscrapers will be popping up just like they were before the financial meltdown.

February 4, 2011
Financial District Adapts as Banks Leave
By CHARLES V. BAGLI - The New York Times

Next year, Fidelity Investments will move from Lower Manhattan to Jersey City.

Deloitte & Touche, the auditing and financial advisory firm, is also leaving the area, for Rockefeller Center, while a neighbor, the Japanese bank Nomura, appears headed to Midtown.

The loss of additional companies from the city?s historic financial district and the surrounding blocks has in the past led to hand-wringing by planners, politicians and landlords about the dubious future of Lower Manhattan.

But this time, the news has been greeted with as many yawns as laments.

Finance still dominates the neighborhood, but Lower Manhattan has changed remarkably over the past 10 years. The residential population has more than doubled since Sept. 11, and the number of hotels has tripled to 18. More important, there are a growing number of law firms, tech companies and nonprofit organizations moving into the district.

Among the 60 media firms that now, or soon will, call Lower Manhattan their home are Newsweek, which recently merged with The Daily Beast; The Daily News and American Media Inc., publisher of The National Enquirer, Playboy and other titles. Cond? Nast Publications is negotiating a 1 million-square-foot lease at 1 World Trade Center, the skyscraper under construction at ground zero. And the number of tourists continues to swell.

?You never want anyone to leave,? said Elizabeth H. Berger, president of the Alliance for Downtown New York. ?But the real story is that while financial services remains our signature industry, Lower Manhattan has diversified. The bottom line is we?re a very attractive place for a lot of different kinds of commercial tenants.?

More than 40 percent of residents walk to work, Ms. Berger said.

The Federal Reserve Bank is still in Lower Manhattan, as is Deutsche Bank. Goldman Sachs recently built a new headquarters for thousands of employees. Oppenheimer Funds, Dow Jones and Commerzbank, whose leases expire soon, are expected to remain in Lower Manhattan. Morgan Stanley, whose headquarters is in Times Square, is looking for more space there.

Still, the very institutions that symbolize the citadel of capitalism are moving or changing in ways that will continue to transform the old financial district. With an ever-increasing percentage of trading conducted electronically at both the New York Stock Exchange and the Commodities Exchange, financial firms no longer feel that being located near those institutions is necessary.

The Federal Deposit Insurance Corporation moved to the Empire State Building from Lower Manhattan last year, and next year, the Depository Trust and Clearing Corporation, which clears and trades securities for many brokerages and banks, will move the bulk of its operations and 1,400 employees to Jersey City.

Both American International Group and Merrill Lynch, once among the largest employers in the area, are shrinking. So the loss of Deloitte, and possibly Nomura, is a blow to Lower Manhattan, some real estate executives say, especially with at least two skyscrapers being built at ground zero.

?The situation with Nomura and Deloitte isn?t the end of the world,? said Peter G. Riguardi, president of New York operations for Jones Lang LaSalle, a commercial real estate broker. ?But it?s disappointing, a setback.?

Since the 1960s, financial firms have been moving from the area to more modern buildings in Midtown, where they could be closer to clients and to the homes of their workers. Concerned about costs, banks began shifting their data operations to the office towers sprouting on the Jersey City waterfront 20 years ago. Fidelity, like its rivals Charles Schwab and TD Ameritrade, also moved there to reduce costs.

But for many city officials, landlords and real estate executives, the idea that Deloitte and Nomura would remain in the financial district was a foregone conclusion.

Last August, the Bloomberg administration agreed to provide Deloitte with up to $21 million in tax breaks to expand its payroll, with the understanding that it would enlarge its presence at the World Financial Center. It would take as much as 630,000 square feet as it moved its world and United States headquarters from Midtown to Lower Manhattan.

But in December, Deloitte began to focus on Rockefeller Center, which offered more prestigious, but older and presumably more expensive office space in Midtown. Real estate executives familiar with the negotiations said that many Deloitte partners preferred being in Midtown, closer to their competitors and to Grand Central Terminal. Since the deal is not yet finalized, no one involved is willing to discuss it. But city officials told Deloitte that they would be far less generous with tax incentives if the company left the financial district.

Real estate brokers said that Deloitte?s move to Rockefeller Center would be dependent, in part, on the law firm Chadbourne & Parke?s vacating its offices there. The brokers said that the law firm is talking to Boston Properties, which was hoping to build a new billion-dollar office tower at Eighth Avenue and 55th Street.

Nomura had also nearly renewed its lease at the World Financial Center when the bank opened talks with the owner of Worldwide Plaza, an office tower on Eighth Avenue between 49th and 50th Streets. Nomura?s current landlord, Brookfield Office Properties, is still battling to keep the bank downtown.

?Downtown?s success cannot come just from financial services,? Mr. Riguardi said.

The loss of both Deloitte and Nomura, more than 1 million square feet combined, would increase Lower Manhattan?s already rising vacancy rate. But officials contend that the neighborhood, where rents are about 30 percent lower than in Midtown, will be increasingly attractive.

Also, the city?s two newest and most technologically advanced skyscrapers are expected to open in 2013 at ground zero. Cond? Nast, which was negotiating to bring its stable of chic magazines to the first tower, would draw an increasing range of companies to the area, brokers said.

Seth W. Pinsky, president of the city?s Economic Development Corporation, said that financial services must remain an important part of that area?s economy. But, he added, ?We?re encouraged, though, by the complementary evolution that has been taking place in the area, evidenced by the explosive growth of its residential population and the arrival of new and growing industries.?