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Sullivan: don't look to city to rescue downtown.

The skies above the city were darkened with clouds but it was not yet raining when Deputy Mayor Barry F. Sullivan advised the Real Estate Board of New York's luncheon crowd at the World Trade Center not to expect any tax breaks from the City of New York to boost the Downtown Market.

"The revitalization of Downtown will not be driven by tax strategy," he forewarned, pointing to the city's "significant" budget problems.

Sullivan made these statements two days before the city, state and Port Authority of New York and New Jersey announced that BankAmerica will lease eight floors at Two World Trade Center and that the institution will enjoy a substantial incentive package, some of which includes tax bonuses.

Sullivan, along with Cushman & Wakefield CEO Arthur J. Mirante and Stanley Brezenoff, executive director of the Port Authority of New York and New Jersey, discussed the somber Downtown market even as they celebrated the evacuation of 40,000 people from One and Two World Trade Center on the day of the recent bombing and the restoration of the Towers and honored those who took part in the enormous undertaking.

"The problems of Downtown are subject to solution," Sullivan said. "but largely in the self-help area," adding that the city can and will be an important supplement to that help.

Sullivan suggested Downtown owners should form a Business Improvement District and obtain leadership on par with the Midtown BIDs to help execute plans in conjunction with agencies such as City Planning.

In the short term, Sullivan said, such a BID could cope with peddlers and increase sanitation and security.

Increasingly, the city is leaving it to property owners to ensure an area is safe and clean through the use of additional property taxes to pay for locally controlled personnel.

Sullivan noted that Downtown is nearly a one-industry town and needs to diversify. He suggested expanding its tourist services, and mentioned Larry Silverstein's Association Center for non-profit groups as a building that is attracting new types of tenants to Downtown.

"I don't believe new residential properties are the solution to downtown New York," he said. "I think we can do some things at the edges ... but it won't be a major strategy ... by itself it is not a home run.'

Sullivan would like to increase the available transportation mentioning that Metro-North and LIRR riders should not have to change trains to get to Downtown and that links to the airport should be improved.

Realizing that his suggestions would be a "sobering or down type of talk," Sullivan commended the kind of spirit that was shown in the World Trade Center crisis. "If we can apply that to the Lower Manhattan, it will be the financial capital and -- small lettersdiversified capital of the world for the next 50 years," he said.

REBNY President Steven Spinola said later he did not think the formation of a BID was a bad idea but he does think taxing policies in Lower Manhattan are an important factor in its problems. "It's overtaxed for the values and the rental stream," he noted.

Spinola was disappointed that Sullivan downplayed the role that residential conversion could play as part of a solution. "1 don't disagree that the owners and tenants are going to have to join together and help themselves," he said, "but we are partners in the City of New York and it means that we and the city need to help ourselves to get out of this recession."

Among those sharing the dais with REBNY's board and the speakers were: The Commissioner of the Fire Department Carlos Rivera, Emergency Medical Services Executive Director Vincent Clark, Building Owners and Manager's Association President Peter DiCapua, Downtown Lower Manhattan Association President Barbara Christen, and World Trade Center Director Charles Maikish. Police Commissioner Raymond Kelly was attending the two officers who had been shot the night before.

Cushman & Wakefield CEO Arthur J. Mirante opened the luncheon meeting with an overview of the Downtown Market and also suggested BID's for both Broad and Water Streets as partial solutions.

Downtown market obstacles are led by high vacancy rates hovering in the 18 percent range for prime space and continuing to rise over the 25 percent mark for secondary space. This, Mirante said, is pushed by the "flight to quality" as tenants take advantage of lower pricing and newer buildings.

Secondary space is sliding to the $10 to $13 per square foot mark while 15-year leases with all concessions in prime buildings are fetching $20 to $23 per square foot.

"The market needs help and it needs leadership," Mirante agreed, suggesting transportation improvements, relief from the occupancy tax, electric rate incentives, employment and moving tax credits along with a focus on foreign and financial companies."

Brezenoff said the Port Authority is pitching in with a $15 million stimulus program to aid the Downtown Community's recovery, "back to normal, fast." This Towers Program includes sales and Dromotional incentives for area retail shops, interim parking for World Trade Center tenants and free PATH service for one week.

Aside from the repair efforts, a $500 million to $700 million refurbishment planned prior to the blast is also underway.

"As building owners, I hope you never have to face what we went through on Feb. 26," said Brezenoff, "but if you do, you should take some comfort in the fact that New York City has the finest emergency preparedness of any city in the world, bar none.

"As one landlord to another," Brezenoff continued, "I don't have to tell you that this episode was a landlord's worst nightmare."

Thanking everyone for their help in their time of need, Brezenoff said it was difficult to overstate the contributions of the thousands of people who worked so selflessly for a common goal including many of the people who were attending the luncheon. "There is a new sense of community among all the tenants and their employees, and also among the Port Authority staff who call it home," he said.

"Together, we put on a display to the world," he emphasized. "We showed them that the strongest thing about the World Trade Center had nothing to do with its structure, but a lot to do with its people."

Christen said she found Sullivan's speech positive. A Downtown assessment report currently being prepared by her association may contain a proposal for a BID, too. "The small building owners are very much aware that they have to sell themselves," she said. "Everyone realizes the city can only go so far."

While the association was a stimulus for the development of Battery Park City, she agreed that residential housing should remain along the periphery.
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Title Annotation:New York, New York Deputy Mayor Barry F. Sullivan addresses Real Estate Board of New York
Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Apr 28, 1993
Previous Article:Building sold in Westport.
Next Article:BankAmerica signs on at 1 World Trade.

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