The Financial District Is Once Again On A Quest For A New Identity
In between the half-empty office buildings and plethora of vape shops that define Manhattan's Financial District today is Laissez Faire, offering oysters and martinis during the early evening and transforming into a nightclub after dinner.
The lounge in The Beekman hotel is one of the only clubs in the Financial District, a neighborhood attempting to find a new identity and fill its sea of vacant commercial spaces as it prepares for a housing development renaissance.
“Laissez Faire is on an island,” said owner Jack Mulqueen, who has opened nightclubs across the city. “But we also wanted to be the torchbearers for the neighborhood.”
The Financial District has historically been known for Wall Street. Its narrow streets are populated with buttoned-up business people who crowd into the neighborhood early in the morning and evacuate as the sun goes down.
But that is set to change, as the majority of office-to-residential conversions planned in the city are concentrated in the neighborhood, giving it the chance to evolve into a place that transcends the workday.
It isn't the first time that Lower Manhattan has had to reinvent itself. The September 11, 2001, terrorist attacks destroyed over 30M SF of real estate and forever changed the neighborhood's fabric and perception. At the time, many New Yorkers swore that the area could never recover, and they resolved to think twice before stepping into a skyscraper again.
It took two decades and $20B of private and public investments to recover from the destruction. The skyscrapers returned, and so did the New Yorkers.
Then, the coronavirus spread across the city, again turning the office hub into a ghost town. Once again, the area is being forced to recover from a potentially existential blow.
FiDi had a 25.4% office vacancy rate at the end of the first quarter, by far the highest in the city, which had an overall vacancy rate of 17.3%, according to Transwestern.
It also has the highest retail vacancy rate in the city. In Community District 1, made up of the Financial District, Battery Park City, South Street Seaport and Tribeca, storefront vacancy is 22%, nearly double the citywide rate of 11.3%, Crain's New York Business reported.
Lower Manhattan has 35,000 residential units and nearly 3,000 in the pipeline, according to a first-quarter real estate report by the Alliance for Downtown New York. That includes 1,300 apartments planned for 250 Water St. and 571 units at 55 Broad St., both conversions.
The area has already seen an increase in young renters and homeowners, with a median age of 35, according to another survey by the Downtown Alliance.
Other projects continue to roll out. The 31-story office tower at 222 Broadway is anticipated to be another conversion after GFP Real Estate acquired it for $148M last month.
Silverstein Properties and Brookfield are poised to receive a $31M government funding boost for the planned 900-foot residential skyscraper at 5 World Trade Center, where a third of the units would be set aside for affordable housing.
Lightstone Group recently completed construction on the 66-story residential tower at 130 William St. Its 242 condo units have almost completely sold out, Lightstone President Mitchell Hochberg told Bisnow.
“Out of all the properties that we've developed, it probably has by far the most diverse community within the building,” Hochberg said. “We have families, we have students, we have young professionals, we have empty nesters and we have a lot of people with pied-à-terres.”
Residents can access a private Imax theater, rooftop terrace, fitness center, spa, basketball court and golf simulator in the building, but Hochberg said that many go to the Lower East Side or East Village to seek nightlife.
“We happen to own a hotel on the Lower East Side that has a number of nightlife venues,” Hochberg said. “We're finding that a big percentage of the people that are visiting the bar, restaurant and nightclub in our Lower East Side hotel are coming from the Financial District.”
That's an indictment of the options closer to their homes, and it could make it difficult to attract residents to fill the influx of thousands of units.
The survey by the Downtown Alliance found that 48% of area residents desire full-service casual restaurants rather than the existing quick-stop restaurants for office lunches or white tablecloth dining for client dinners. Another 39% want restaurants with later hours, and 16% are looking for more family-friendly options.
Nearly half of the survey's respondents said they want more performing arts, live music or DJ venues.
Retail brokers told Bisnow that retailers are interested in the area because of the new residential developments and the large subway hub at Fulton Transit Center, but they are slow to commit to leases.
Fulton Center's 50K SF of retail has also seen its challenges. Its operator, Unibail-Rodamco-Westfield, is trying to terminate its lease, citing safety and security concerns.
Current Real Estate Advisors principal Michael Segerman, who is working to fill some of the area's storefronts, added that restaurants are struggling to secure liquor licenses in the area.
“If the community board were to loosen its restrictions on a certain area of Downtown, specifically FiDi, it could attract a whole range of operators that would love to be down there and cater to the populated residential components, as well as the traditional office tenants that have been there for years,” Segerman said.
A few bars have snuck their way into the neighborhood in the last quarter alone, although most close before midnight.
At 6 Hanover St., Conwell Coffee Hall opened, serving coffee and cocktails in an art deco Wall Street bank. Zizi Wine Bar at 1 Dutch St. in Brookfield Place brought in a taproom for Brooklyn's popular Sixpoint Brewery.
Outside of nightlife, the area also welcomed the opening of Court 16, an indoor tennis club, and Mercer Labs Museum of Art and Technology.
The Financial District also borders the South Street Seaport, which has been revitalized as a destination for shopping and dining. Residents can easily walk to the Tin Building’s food hall and Casa Cipriani’s members-only club.
Hodges Ward Elliott Managing Director Jay Morrow, who specializes in hospitality investment, said the neighborhood's hotels have seen a jump in revenue as more tourists stay in the area. But while it has attracted more diverse offerings, like the two-Michelin-starred Saga at 70 Pine St., its growth has been “incremental.”
To move the area forward, it has to face an existential question: How can it both establish and differentiate itself?
“It's not just a replication model of ‘Oh, let's go take something cool that's elsewhere and plug it in here,’” Morrow said. “That redundancy typically doesn't work in markets.”
Downtown Alliance President Jessica Lappin argued the Wall Street stereotype surrounding the Financial District is long gone.
“I don't think that is a perception widely held,” Lappin said. “In my view, there's fashion companies Downtown, there's advertising companies and tech companies Downtown. They have transformed the vibe.”
She said the neighborhood does, in fact, have a nightlife scene, but it isn't concentrated in one strip — unlike other districts — making it less obvious to those on the street.
“If you want to go from a bar to a restaurant to a different bar, you can do it, but it takes a little more walking around, as opposed to just bouncing from one to the other,” Lappin said.
Mulqueen, who just opened Laissez Faire, said that concentration will come.
He has watched the nightlife scene move lower into Manhattan over the last 20 years, from the Meatpacking District to SoHo to the Lower East Side. He said that based on the “trajectory of the hurricane,” the Financial District, aided by the increase in residential, will be next.
“My partners and I like to joke that the two of the main pillars of nightlife in Manhattan are fashion models and guys who work in finance,” Mulqueen said. “And you have a great abundance of them in that vicinity.”
