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Queens Chronicle

Queens Businesses Post 9/11: What Happened To Our Boom?

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Posted: Thursday, July 18, 2002 12:00 am

As the dust and debris slowly began to be cleared from Lower Manhattan, and the last remnants of the World Trade Center were removed, people’s thoughts turned to the city’s economic recovery.

Hundreds of businesses, from small firms to multi-million-dollar global conglomerates had been located in the Twin Towers and then were suddenly displaced.

Some businesses promised to be patient, offering to rebuild in what was once the city’s primary economic district. Other companies though, understood that, in order to survive, available office space outside of Lower Manhattan was needed immediately.

For many in the know, Queens appeared to be the perfect place to house many of the displaced tenants.

In the midst of a corporate renaissance, Long Island City had a glut of recently rezoned office space—all located just minutes from Midtown—and available for a third of what developers would pay in the city.

However, while area developers and real estate brokers began to hint that LIC’s East River waterfront could be on the verge of an economic boon, most large companies seemed uninterested in moving to Queens, choosing to pack their bags for New Jersey, Long Island or Westchester County.

What Went Wrong?

Dan Miner, director of business services for the Long Island City Business Development Corporation, said that most companies were looking for office space that was fully developed, furnished and ready for clients to move into.

“We didn’t have that. You have to look at it from their perspective. They needed office space immediately, not 18 months down the road.”

Long Island City in the wake of September 11th, Miner said, can be likened to the age-old question of what comes first, the chicken or the egg? Or in the case of LIC, the development or the tenant.

The area had marketed itself on its abundance of readily available, and affordable, Class A office space. However, before developers will invest money into building a skyscraper, or even rehabilitate old factories, a tenant is needed to facilitate those changes.

Thus, when an opportunity arose for a significant number of clients to finally move in, Long Island City could not offer potential tenants the one thing they really needed—a almost immediate resumption of their daily routine.

Still, there are other theories as to why Long Island City didn’t serve as an attractive option for ex-Lower Manhattan companies.

Marie Nahikian, executive director of the Queens County Overall Economic Development Corporation, said information about available property in Western Queens was made readily available to commercial real estate brokers. However, the job of helping to relocate many of the displaced companies was handled by a Manhattan real estate board, whose interests, she suspects, lay elsewhere.

“Some (brokers) were asked not to tell their clients about sites in Queens, because they were representing other boroughs,” Nahikian said.

Making matters worse, according to Dan Andrews, spokesman for Queens Borough President Helen Marshall, Queens was trapped in an awkward economic position after September 11th—walking a slippery slope between tragedy and capitalism.

“We didn’t want people to think that we were capitalizing on the tragedy,” he said. “But, we had to let companies know, in a tasteful way, that space is available.”

What Queens didn’t want, Andrews said, was for firms to think that attractive commercial space was only available if they left the five boroughs. He calls it “upsetting” that so many major companies packed up shop for New Jersey.

“A lot of firms are not aware of the convenience of Long Island City. It’s just a matter of getting the word out.”

Queens has also suffered from a lack of federal support, which in the wake of the terrorist attacks, was directed primarily to Lower Manhattan. In a desperate attempt to keep many businesses from fleeing the city, hefty grants were offered to those who practiced patience and stayed put.

“There continues to be a market for Queens,” Nahikian said. “It’s productive, convenient and money can be saved. I don’t think that many companies really knew what they could have had.”

LIC’s Future—Patience Is A Virtue

Although Long Island City’s growing momentum as the city’s next great business district has been slowed considerably by September 11th, and the subsequent downturn in the economy, the outlook for its future remains a positive one.

Mayor Michael Bloomberg announced last week that creating a central business district in Long Island City is one of his administration’s top five economic development priorities—along with Lower Manhattan, the far west side of Midtown, Downtown Brooklyn and Governors Island.

A federal incentive program to draw businesses back to Lower Manhattan could also be extended to Long Island City, city officials said, helping to spur additional growth in the area.

However, LIC’s transformation had already begun in earnest long before last September. In 1989, Citicorp became the area’s anchor client, building a 48-story office tower near Court Square.

Then last year, the city took the next step, rezoning a 37-block area of former industrial space for commercial and residential development.

Met Life was the next major company to entrust their future to Long Island City, signing a 20-year lease to bring their operation to 27-01 Bridge Plaza, the former home of the Brewster Carriage Company. In November, 900 employees moved into the converted factory. Another 600 jobs will be relocated following the construction of a 12-story addition, for which the building’s owner, Brause Realty, recently broke ground.

The neighborhood’s most high profile tenant, the Museum of Modern Art, opened the doors to its temporary three-year home last month with strong crowds and generally positive reviews.

This September, the Museum of African Art will relocate from its current SoHo home to 36-01 43rd Avenue.

While successful in raising Long Island City’s image as a burgeoning commercial area and, at least temporarily, art district, all of these moves had been set in motion long prior to September 11th. Brokers who work the area are hard-pressed to name even one major company that has followed suit since.

Jerry Wolkoff, president of G and M Realty, said the current economy doesn’t favor companies expanding or moving their operations.

“The perception and climate of the business market is down,” Wolkoff said, pointing to the growing number of major corporations, such as World Com and Arthur Andersen, that are involved in charges of fraud and deceptive accounting practices. “It’s not just Long Island City either. The whole city is suffering.”

One of LIC’s largest potential projects—three million square feet of office space on either side of Jackson Avenue at Queens Plaza—now rests on the backburner after its developer, the Louis Dreyfus Property Group, pulled out, choosing to build in Manhattan.

Another major development, a 15-story, 655,000-square-foot office building at 30-30 Northern Boulevard awaits the signing of an anchor tenant, as does a 30-story, one million-square-foot office building on Jackson Avenue, near the Citicorp tower.

“Real estate, like business, is cyclical,” Wolkoff said. “And, right now we’re in a holding pattern.”

Wolkoff suspects that it could take as long as two years for the market to recover and for Long Island City, which he calls “the hidden jewel of New York,” to resume its momentum.

One of LIC’s biggest selling points for companies that do eventually decide to relocate, he said, is that local developers have the space to build office towers from scratch, rather than just modernizing existing space. And, with office space typically running about $15 a square foot, tenants can pay approximately a third of what they would in Manhattan.

Other enticing benefits include striking views of the Manhattan skyline and a transportation system fueled by subway and bus lines that can transport workers to Midtown in a matter of minutes.

However, what may ultimately draw Manhattan-based companies to Western Queens is an opportunity for them to disperse their operations so that they are not dependent on a single transit line or power grid, as was the case with most companies that were based in the World Trade Center.

What Long Island City desperately needs to compete with the city’s other major commercial districts, experts say, is an influx of retail stores and restaurants, possibly on the Vernon Boulevard corridor, to draw added foot traffic to the area. The shopping centers could be supplemented by residents of the recently built Queens West housing developments in Hunter’s Point.

“If you build housing, the stores will come,” Andrews said. “But, it doesn’t come overnight.”

While some people in the local business community are anxious for Long Island City to complete its long awaited renaissance, most stress patience, understanding that like Rome, Western Queens wasn’t built in a day.

And, although moving to Long Island City didn’t fit into the short-term plans of many Lower Manhattan companies, Miner still suspects that three to five years down the line—when their temporary leases expire—they could have a change of heart.

“People have been waiting for Long Island City to boom for a long time,” Miner said. “We are closer to that reality than we have ever been.”

Welcome to the discussion.