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MANHATTAN ON THE MEND

But downtown retailers face a slow recovery

By Donna Mitchell

Century 21, opposite Ground Zero, reopened in February after months of cleaning and repairs. But sales still lag.

More than a year after the destruction of the World Trade Center, Lower Manhattan’s retailers and restaurant owners continue to struggle. But because their businesses are still around to struggle, the owners consider themselves fortunate.

Area merchants saw a precipitous drop in business after the attacks. In addition to the more than 2,400 office workers killed, an estimated 100,000 workers either lost their jobs or were relocated. For several months Lower Manhattan was isolated and barren, as streets were cordoned off for recovery work and subway service was suspended. Because these independent streetfront retailers do not report to one landlord, overall Lower Manhattan sales figures are hard to come by. But the Alliance for Downtown New York, which is dedicated to stimulating business in the area, estimates that half the stores and restaurants there saw at least a 40 percent decline in third-quarter sales last year.

“It was empty; there was no foot traffic,” recalled Drenda Galeotti, a spokeswoman for Calypso Christiane Celle, an apparel and accessories retail group that operates several concepts in Lower Manhattan. By the end of the 2001 fall season, the group’s sales were off by about 50 percent from the previous year, she said. “No one was in the mood to shop. We could still smell the burning electrical systems for three months.”

Century 21 Department Store, a downtown Manhattan fixture for bargain hunters with a taste for designer apparel, sustained no structural damage despite its location across the street from the World Trade Center site. But its owners did have to close the building for five months of interior cleaning and restoration.

A few blocks from Wall Street, Vine Restaurant, which once bustled with customers from the surrounding financial district, saw its business dry up when authorities closed off surrounding streets, shutting off the restaurant’s food deliveries. Even when the deliveries resumed, sales were down about 40 percent; the restaurant lost more than $600,000 in business. Owner Julie Menin had to lay off half her staff and briefly close the restaurant.

The area’s story since those harrowing days has been one of slow, difficult progress, but progress nevertheless. About 40,000 of those lost 100,000 jobs have returned, according to Alliance for Downtown New York. And shoppers, too, began trickling back at the beginning of this year.

“Things seem to have stabilized over the first quarter of 2002,” said Shirley Jaffe, the alliance’s vice president of economic development. “The decline is halting, and there seems to be a slight increase in sales.”

Calypso said it recovered about 30 percent of its lost sales going into the summer season. And, with great fanfare, Century 21 reopened in late February in a ceremony attended by Mayor Michael R. Bloomberg. “Century 21’s commitment to being a part of the return of Lower Manhattan is nothing short of amazing, and we are grateful for their perseverance,” the mayor said at the gathering.

But months later Century 21’s sales performance continues to lag behind the results of previous years, acknowledged Raymond Gindi, the company’s COO and a member of the family that owns the store, echoing the reports of other area merchants. The fact is, downtown Manhattan still has a long way to go.

The Winter Garden, directly opposite Ground Zero, has been restored to its former glory.

“There have been tremendous office vacancies,” said Gary Trock, a director in the retail leasing group of Insignia/ESG, a New York City commercial real estate services firm. The financial institutions that left downtown for locations elsewhere in Manhattan or across the river in New Jersey left behind buildings that are hard to convert into spaces for other tenants, not least retailers, Trock said.

Nevertheless, some have given it a go. Insignia/ESG helped negotiate a lease for a 30,000-square-foot Borders Books and Music store in a building on Broadway previously occupied by Bank of Tokyo-Mitsubishi, just two blocks from Ground Zero. For Borders officials, who expect the store to open in late spring 2003, opening the store was both a return to familiar grounds and an act of giving the neighborhood a place to gather. The company lost a 37,000-square-foot bookstore with the destruction of the Westfield Shoppingtown World Trade Center in the Twin Towers’ concourse, said David Rayner, Borders’ director of real estate for the Northeast region.

“This situation created a special need,” Rayner said. “We decided that despite the reduced amount of office space, and that — at least in September and October [2001] — many of the residents had left, this is a place where we wanted to be. And we did not give it a second thought thereafter.”

Retail rents in Lower Manhattan have remained stable, at between $65 and $125 per square foot, the same as before the attacks, said Trock. One explanation seems to be that unlike office property, vacancies in the retail sector have not risen to alarming levels, despite the closures of some stores. As of August 2002, the retail vacancy rate below Chambers Street was about 12 percent, according to Wall Street Rising, a nonprofit organization founded in October 2001 by Vine owner Menin that assists businesses in Lower Manhattan. Menin runs Wall Street Rising full time while owning the restaurant.

Calypso officials say no one was in any mood to shop for months after the attacks. The retailer received about $10,000 from the WTC Disaster Recovery Program.

“A lot of these tenants are still there,” Trock said. Some of that has to do with the grants and other help they’ve received from government agencies and advocacy groups. Vine, for instance, got about $75,000 from the WTC Business Recovery Grant Program, according to Menin.

As someone who lives and owns a business in Lower Manhattan, Menin took a special interest in seeing Lower Manhattan rebound. In August the group launched the Retail Attraction Program to help businesses move to the area. The group compiled exhaustive research and published a booklet packed with information, including an inventory of vacant retail spaces and a summary of available grants and tax incentives.

“This is a historical time to consider Lower Manhattan,” said Menin. “The rents are half of [what they are] in Midtown, when one factors in the grants and tax incentives.”

The Alliance for Downtown New York teamed up with Seedco, another New York City business development organization, to launch the Lower Manhattan Small Business and Workforce Retention Project. Raising $15 million from corporate and private contributors, the groups distributed grants and low-interest loans to about 500 Lower Manhattan businesses, said the alliance’s Jaffe.

Calypso received about $10,000 from the WTC Disaster Recovery Program Grant Fund and is also applying for funds from the WTC Business Recovery Grant Program, jointly administered by city and state officials, Galeotti said. Meanwhile, inspired partly by former Mayor Rudolph W. Giuliani’s calls for businesses and their customers to resume their normal routines, Christiane Celle, Calypso’s president, launched Homme, a men’s boutique in downtown Manhattan, in December 2001.

“All eyes would be on downtown now,” Celle remembers thinking after the rallying cry by Giuliani and others. “I felt it was important not to give up.”

Homme has not met sales projections for its first year, Celle said, declining to give figures. But she said she nonetheless remains committed to the concept.

That appears to be a common attitude among the other retailers downtown.

“In the long term, we are optimistic,” said Century 21’s Gindi, who acknowledges that he did not know exactly what to expect upon reopening. “It all depends on the rebuilding process, of the whole [of downtown Manhattan] and of the World Trade Center.”

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