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Weekly UpdatesNevertheless, it is market forces, not governmental subsidies that sustain the vast regional office market, which is more than 600 million square feet in size. Two-thirds of that inventory is in Manhattan. In early 2001, vacancy stood at just 5 percent in the urban core. Pre-September 11, largely in response to the technology and stock market slump, vacancy was up to about 8 percent. The destruction of the Trade Center and damage to surrounding buildings pushed occupancy in late 2001 to approximately 95 percent. But that quickly eroded in the ensuing recession, and vacancies were nearing 9 percent in 2004, when the market began to tighten again. The wisdom of a conservative policy that did not push for supply-side development incentives in the face of a battered market is now readily seen. However, it is in the attention to the demand side of the equation that perhaps the most far-sighted decisions were made soon after the catastrophe of 9/11/01 struck.
DEFINING NEW YORK AS A "CITY OF TOMORROW"
Solidifying Our Position as a Global Capital
New York has stood atop the U.S. urban hierarchy ever since the opening of the Erie Canal. The civic, business, and labor leaders convened by REBNY made this the linchpin of the revitalization strategy, and immediately launched a four-pronged effort to bolster the region's position in the global economy.
First, in cooperation with the New York Federal Reserve Bank, a coordinated campaign to secure and then to enhance the city's position as a hub for cross-border financial flows was put in place. The New York Stock Exchange, which represents more than a 40 percent share of the total capitalization of the world's markets, committed itself to an expansion program that included a five-year program to increase the number of seats on the exchange by 10 percent, jump-starting a new generation of financial firms.
Second, corporate leaders made team visits to every major U.S.-based transnational corporation to market the New York region as a business location. Especially where economies of proximity would increase business speed and coordination, corporate leaders pushed suppliers and customers to consider a tristate location. But every U.S.-based transnational was asked to make at least a representative agency commitment to the area. Taking a page from such aggressive cities as Nashville, Tampa, and Raleigh, the New York business community first understood and then sold the concept that promoting regional growth was the strongest long-term strategy for protecting their own investments in the metropolitan area.
Third, the region planned, targeted, financed, and executed a world trade strategy that sought a 10 percent annual increase in the number of foreign firms with operations in the region. These trade missions visited over 1,000 firms abroad during the last five years, beginning in 2002, listening to the companies' objectives and issues concerning a New York-area location. They reported back directly to the REBNY-convened Executive Steering Committee and to RRERA, both of whom made global competitiveness a high priority for regional policy.
Fourth, led by the Port Authority of New York and New Jersey, programs to improve operations at the region's airports and seaports were accelerated. The agency worked with the Army Corps of Engineers to assure deep-water access for 50-foot draft container shipping by the year 2010. Capital programs already underway at JFK and Newark were fast-tracked to completion by 2004. Negotiations with Metro-North were begun to create a rail link from Stewart Airport in Newburgh directly to Grand Central, and the state of Connecticut committed to a site search for an international airport near Stamford, with a direct Acela connection to Penn Station. These projects are expected to provide adequate international transportation capacity through 2025.
Reaffirming the City as a Population Magnet
In a worldwide extension of the "I Love NY" campaign, featuring symbols such as the Statue of Liberty and Ellis Island, the RRERA enunciated the unmistakable message that the region regards an open-door policy as imperative for its future vitality. The nation and the world now understand, perhaps as never before, the dynamic role in the region's economy played by the Asian community in Flushing and Brooklyn's Borough Park, the Russian immigrants in Brighton Beach, the South American enclaves in Jackson Heights, the Arab neighborhoods along Atlantic Avenue, the Indian restaurants near Gramercy Park, the Caribbean swath in Crown Heights and East Flatbush, Washington Heights and the Hub in the Bronx. This story was reinforced by "next generation" success stories from the city's outstanding public high schools: Stuyvesant, Bronx Science, Brooklyn Tech, Midwood, LaGuardia, Townsend Harris, Benjamin Cardozo, Hunter College HS, and Susan Wagner.
The area's exemplary cluster of colleges and universities were tabbed to step up their nationwide recruiting efforts, targeting a 15 percent increase in incoming freshmen from beyond a 200-mile distance from New York. The continuing replenishment of the New York talent pool was identified as a major contributor to future economic vitality and competitiveness. Students with career aspirations in key sectors including emerging technologies, business and finance, communications, international studies, and elementary/secondary education were targeted. Corporate sponsorship of scholarships in these areas helped in the recruiting efforts.
Emerging Technologies Targeted/Incentivized
Building upon the 2001 Group of 35 Report, the region targeted four key industry dusters as "emerging technology" opportunities and pulled together resources from the entire tristate area to encourage their growth. Those industry clusters were medical/ health (bio-tech), computers/data processing (info-tech), communications and advanced media, and environmental science. The emerging technology industries were identified for their potential to grow more rapidly than the local and national economy generally, to take advantage of existing intellectual capital resident in the region, to exploit the interface between the expansion needs of these industries and the financing expertise available locally, and to position the region on the cutting edge of innovative technology for the 21st century.
Challenge grant programs were set up in conjunction with the National Science Foundation, the Federal Office of Technology Assessment, the National Institutes of Health, the Homeland Defense Agency, the Federal Communications Commission, and the Environmental Protection Administration. Seed money was designated in modest amounts by each of the states to establish a revolving loan fund dedicated to emerging technologies, which then found its primary funding from venture capitalists and ultimately was able to access the public markets.
Flexible zoning and site assembly efforts were critical to developing the first incubator sites, which tended to be in low-cost, low-density locations in the outer boroughs and suburban areas. The region's teaching hospitals and research universities joined forces with corporate sponsors, agreeing to strike a balanced approach between the necessary basic science and the economic requirement for the development of marketable products.
The key concept, stressed again and again by RRERA, was the need to diversify the region's economic base while building on its strengths. The near-term objective, beyond simply stimulating growth, was to reduce the region's dependence upon the highly cyclical financial services industry, which had become increasingly dominant as a percentage of total employment in the last 30 years of the 20th century. The long-term goal was to create a matrix of complementary industries throughout the region, matching lower-density functions to opportunities outside Manhattan while keeping high value-added functions appropriately and efficiently at the city center.
Reinforce the 24-Hour City Attributes of New York
Arts, culture, and recreation are multi-billion dollar industries in New York. More importantly, they help define the best in the New York lifestyle. Therefore, efforts to shore up the 24-hour activities in the region were more than just public relations. They were key to sustaining the spirit and the vibrancy that attract the brightest and best to the region and persuade businesses that the substantial benefits of a New York location outweigh its undeniably higher costs.
Furthermore, the travel and tourism industry lives in a symbiotic relationship with the arts, recreational and cultural world, as well as with the flow of business travel in the area. Thus, high profile events assumed great importance, especially in the first years after the 9/11/01 events. For a time, it appeared that the 2002 Superbowl might be attracted to Giants Stadium when scheduling conflicts arose in New Orleans. Although that fizzled, the region immediately set its sights on getting the NCAA Final Four tournament for 2003 or 2004, with Madison Square Garden as the arena. One of the political parties brilliantly made an unsolicited offer to bring its national nominating convention to New York in 2004, tapping into an immense reservoir of good will and favorable publicity for its contribution to recovery. The city went all out to secure key industry shows and events, from Market Week for the fashion industry, to the Emmy and Grammy award shows. Op-Sail 2006 was quickly put on the calendar. Throughout the effort, a thematic linking of national pride to the feistiness of New York was consistently articulated.
HOW DID IT EVER SUCCEED?
From the perspective of 2006, the train of events seems to have had a kind of inexorable momentum of inevitability behind it. Nothing could be further from the truth. In fact, from the perspective of late 2001, the progress of the past five years would have appeared wildly improbable. What then made it work? A few basic principles best describe the formula.
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