In Jersey City, Wall Street found a temporary refuge after Sept. 11

Published: Sunday, September 11, 2011, 9:00 AM
By Sarah Portlock / The Star-Ledger


Lunch crowds fill the Harborside Financial Center in Jersey City in mid-August.

In the days immediately after the Sept. 11, 2001, terror attacks, thousands of Wall Street professionals were swarming the streets along the Jersey City waterfront ? workers displaced when their companies were forced out of Lower Manhattan.

Companies scrambled to find temporary office space. Desks and computers were delivered by the hundreds to the area.
At least 33 companies that had leased more than 10,000 square feet apiece in the now-damaged or destroyed buildings relocated to New Jersey or added employees to existing office space in the state, according to a March 2002 report by the real estate advisory firm TenantWise.com.

Firms moved in with other companies or into available space in not only Jersey City but also Morristown, Florham Park, Iselin, Rutherford, Piscataway and other towns.

In the months that followed, however, many firms began returning across the Hudson River. Keeping an address in the financial capital of the world was considered an important symbol, and some companies didn?t want to be seen as abandoning the city they called home.

In the past 10 years, Jersey City never saw any long-term office boom as a direct result of Sept. 11, according to real estate professionals familiar with the area.

Some major financial companies still have a presence along what?s known as the Gold Coast ? but many were here before or had already been considering the move. Overall vacancy rates for the Hudson waterfront jumped to 13.7 percent in 2002 from 4.9 percent the year before, and got as high as nearly 16 percent in 2005, according to data from the real estate firm Cushman & Wakefield. In the second quarter this year, vacancy rates for the Hudson waterfront were 6.7 percent ? the lowest since the overall year average in 2001.


Dan Frohwirth, director of real estate at the Jersey City Economic Development Corporation, in his Jersey City condo living room that overlooks NYC skyline on Thursday, August 11, 2011.

The tragedy did have one significant impact, however: it exposed Jersey City and its attributes to a wider swath of the region?s population, said Dan Frohwirth, director of real estate at the Jersey City Economic Development Corp.
?People finally realized that we were here,? said Frohwirth, who has watched the activity unfold in his 15 years on the job.

?It made an impact in a strange way ? it wasn?t the obvious way,? he added.

Interest Rising

In recent years, as companies re-evaluate their real estate portfolios and consider ways to cut costs, Jersey City is starting to take hold again as a desirable location to consolidate operations because of its lower operating costs, one-stop proximity to Manhattan via PATH train, easy accessibility for employees who live in New Jersey, and financial incentive packages offered by the state.

And at $30.78 per square foot, average office rents in the area are about one-fourth less than the $39.38 rents in downtown Manhattan and less than half of midtown rents of $65.35, according to Cushman & Wakefield.

Interest in the area is ?absolutely exploding again,? said Carl Eriksen, a senior vice president with CB Richard Ellis who focuses on the New Jersey waterfront office market. ?We?re running out of space quickly down there.?

If demand continues, the economy turns around and job creation picks up, real estate brokers said Jersey City?s waterfront could see new construction in the coming years.

?We?re at a tight enough vacancy rate ? under 10 percent vacancy ? and that?s when landlords think about building,? said David DeMatteis, associate director with Cushman & Wakefield in East Rutherford. ?It would take a very strong credit company with a long-term commitment, but I think you?re going to see over the next five years, at least one or two new buildings added to the mix.?


The 9-11 memorial at ICAP in downtown Jersey City.
Some Stay
Not everybody who came to Jersey City immediately ended up making the move back to Manhattan, however.

ICAP, which handles derivatives trading between large banks and is based in London, had offices in the World Trade Center?s north tower, and quickly relocated more than 700 employees to office space in Midtown Manhattan and Jersey City. A little over a year later, having looked at ?many locations? in Manhattan and Jersey City, the company decided to move its regional headquarters for the Americas ? and all 1,100 employees ? to a renovated building in the Harborside Financial Center, said spokesman Guy Taylor. The company plans to stay in the area ?for the foreseeable future,? he said.

In 2005, the company dedicated a memorial to employees who died on Sept. 11 on a small plaza outside the building.
Other firms that were here before Sept. 11 have added to their existing operations or are planning to in the future.

Goldman Sachs has one of the largest corporate presences in Jersey City, with more than 4,500 employees in its 43-story tower on Hudson Street that opened in 2004. The company initially relocated 3,000 employees here, and brought over an additional 1,500 employees three years later. The firm also owns land adjacent to its building and continues to review plans for growth in Jersey City, said spokeswoman Gia Mor?n.

 Next year, Fidelity Investments, based in Boston, will relocate some employees from its Manhattan and existing Jersey City offices to a new location in the Newport section, said spokeswoman Jennifer Engle. The company first came to Jersey City in 2002, but had been discussing plans before Sept. 11.


 In May, Merrill Lynch renewed its lease for its building on Greene Street, where it has been since 2000. The company has also leased space nearby on Hudson Street since 1992, but no decision has been made on the company?s long-term future at either building, said spokesman T.J. Crawford.

The LeFrak Organization, which built and owns most of the residential and office properties in the Newport area of Jersey City, has about 20 sites ready for office, residential or other new development, said principal Jamie LeFrak. The company is waiting for the right time and place to start building.
?The Jersey City waterfront really travels hand in hand with the New York metropolitan area and the financial services industry,? LeFrak said. ?Everything from new construction to residential rents to who occupies the neighborhood rises and falls with the fortunes of the New York area?s leading industry.?
Sarah Portlock: (973) 392-5994 or sportlock@starledger.com