October 31, 2012 at 14:29 PM EDT
Tenants scramble for acres of temporary space
With lower Manhattan crippled in the wake of the storm that knocked out power and flooded the ground floors of dozens of commercial buildings in the financial district, several large tenants are scrambling to find alternative offices to get on with business. Consolidated Edison Inc. cut power to virtually all of Manhattan below 39th Street in an effort to minimize damage to electrical equipment and power lines during the storm, and that outage continued on Wednesday morning. A Con Edison spokesman said the company expects to restore most power within four days. Numerous buildings in lower Manhattan however were swamped with water, particularly those on the southern tip of Manhattan and on the east side of the financial district. Those properties hardest hit by the storm could be without electricity for two to three weeks or even longer, several experts said, as a result of damage to building systems such as power, heating, ventilation and elevators. Tenants in buildings that look likely to be out of commission for longer periods have begun to search for alternative space. Among those towers inundated by surging waters were One New York Plaza, where investment bank Morgan Stanley has offices and the law firm Fried Frank is based; and Four New York Plaza, which houses JPMorgan Chase & Co., New York Daily News and American Media, publisher of the National Enquirer . According to several leasing executives, Fried Frank is searching for about 100,000 square feet of temporary space, about a quarter of the square footage the firm occupies at its New York headquarters at One New York Plaza. Several leasing executives said that Morgan Stanley was also looking for space. The bank occupies over 1 million square feet at the tower. A spokeswoman at Morgan Stanley said that staff located at One New York Plaza had been instructed to work remotely or move to other company locations, including its Manhattan headquarters at 1585 Broadway in Times Square, which is fully operational. Several leasing executives familiar with the company said that it was still considering about 200,000 square feet of sublease space as a result of the storm and that it was perusing space being offered by the banks UBS and Societe Generale in Newport, N.J. A source at Brookfield Properties, the landlord of One New York Plaza, who asked to remain anonymous because he is not authorized to speak for the company, said that it was making vacant space available to displaced tenants at the World Financial Center. Brookfield also owns that 8 million-square-foot-office complex, which appears to have escaped serious damage from the storm and is one of the few office properties with power in lower Manhattan because of backup generators. It was not clear on Wednesday morning if Morgan Stanley, Fried Frank, or any other tenants were in talks to move into the complex for the time being. A source at JPMorgan said that the bank was planning relocate staff from Four New York Plaza, which early inspections indicate could be uninhabitable for up to three weeks. He said the bank would backfill staff into existing space in the company's office portfolio and would not lease temp facilities. "We have 10 to 11 million square feet in the region and we have backup continuity plans," the person said. One Chase Manhattan Plaza, JPMorgan's downtown headquarters was not damaged by the storm, the bank source said. Many buildings were affected by the crisis. Nathan Wasserman, a principal at AM Properties, which owns four large office buildings in lower Manhattan—75, 80, 90 Maiden Lane and 65 Broadway—said that his buildings experienced flooding. "I was downtown yesterday morning," Mr. Wasserman said. "I didn't see water in the streets by then. It wasn't sloshing, but the basements were flooded. You ever see an Olympic sized swimming pool? That's what it looks like at 80 Maiden, where we had the worst flooding. It was about seven- to eight-feet deep. You could literally jump in and go swimming." Mr. Wasserman said his firm was rushing to clean out the water and that he expected the damage to be minimal. He didn't think his buildings would be among those offline for weeks beyond the restoration of power from Con Edison. One of the biggest issues his company had faced in the past 24 hours was procuring the pumps necessary to suck out the water in buildings, equipment that is suddenly in high demand and has hence become yet another complication for many landlords struggling to reopen their properties. Power generators are also suddenly scarce. "Everyone is looking for the same equipment," Mr. Wasserman said. "Our building manager was making calls in the Yellow Pages. We bought a big generator from a hardware store that is about 11 horsepower and my uncle got a smaller generator on Craigslist." Mr. Wasserman said he had relocated one tenant, which occupied a roughly 7,000-square-foot space in his downtown portfolio, to a building his firm owns in Midtown 352 Seventh Ave. "They work for the court system and needed to back online immediately to access and print documents," Mr. Wasserman said.
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