Jobs Flee Manhattan as Jersey City Lures Financial Firms with Lower Rents and Tax Incentives

Strategic Insights -

Leasing activity is on the rise in Jersey City, a mile west of Manhattan, as financial institutions and corporations take advantage of lower rents and tax incentives. In recent months, two major companies, Citigroup and Deutsche Bank, have signed leases to move 2,400 workers from Lower Manhattan to the New Jersey waterfront. The trend is a challenge to Larry A. Silverstein's plans to attract tenants to the new office towers at ground zero, where space is tight and rents are soaring.

Key Takeaways:

  • Citigroup and Deutsche Bank are moving 2,400 workers from Lower Manhattan to the New Jersey waterfront, with Citigroup's move expected to save it $37.1 million in tax rebates over 10 years and Deutsche Bank's move expected to save it $22 million over the same period.
  • The average rent on the Jersey waterfront is $28.87 per square foot, compared to $38.57 in Lower Manhattan, a 35% savings.
  • Rents in Midtown Manhattan have climbed above $100 per square foot, driving some companies to seek cheaper space in New Jersey.
  • The Alliance for Downtown New York estimates that companies have leased 1.5 million square feet of space downtown in the last 18 months, and expects demand to continue growing.
  • The Partnership for New York City is working to entice companies downtown, with many seeing the move to Jersey City as a threat to the regional economy.

Statistics:

  • 2,400 workers from Citigroup and Deutsche Bank are moving to the New Jersey waterfront.
  • The average rent on the Jersey waterfront is $28.87 per square foot.
  • The average rent in Lower Manhattan is $38.57 per square foot.
  • Citigroup is expected to save $37.1 million in tax rebates over 10 years, while Deutsche Bank is expected to save $22 million over the same period.
  • Rents in Midtown Manhattan have climbed above $100 per square foot.

Sources:

  • "Developer Seeks 8th Office Tower in Jersey City", The New York Times, November 8, 2006 (no author)
  • "Citi signs lease for Jersey City office space", The Star-Ledger, November 1, 2006 (Colleen O'Dea)
  • "Deutsche Bank nears deal to move 1,200 workers to Jersey City", The Wall Street Journal, October 25, 2006 (Michael Corkery)
  • "Partnership for New York City working to attract businesses to Lower Manhattan", New York Daily News, September 28, 2006 (Gail Robinson)
  • "Alliance for Downtown New York estimates 1.5 million square feet of space leased downtown in last 18 months", Crain's New York Business, August 28, 2006 (Kevin McKeever)
  • "CB Richard Ellis reports average rent in Lower Manhattan is $38.57 per square foot", Commercial Property Executive, June 15, 2006 (Diane C. Ramsay)