Patrons enjoy food and drinks on Stone Street in Lower...

Patrons enjoy food and drinks on Stone Street in Lower Manhattan. (Aug. 19, 2011) Credit: Steven Sunshine

Beer glasses clink above the cobblestones on Stone Street in Manhattan's financial district as smartly dressed professionals blow off steam after work while waiting for an outside table.

The crowd tells the story of recovery and rebirth in the decade since clouds of dust and debris from the World Trade Center covered the area.

Peter Poulakakos, who along with his father and partners owns six food and drink establishments on Stone Street and around the corner on Hanover Square, said they had been planning to open a pastry shop when the attacks came in 2001. Those plans were put on hold and downsized.

"It was difficult to survive," he said. "You realize like anyone else who had a business, you had to somehow hold it together, and we did the best we could."

His father, who started the eponymous Harry's restaurant at Hanover Square in 1972, was the inspiration to stick it out, he said.

"He had been through a lot of up and down economies -- Wall Street good days and Wall Street bad days," he said. "He was like, 'Listen, let's just stick to what we do and things are going to come back because that's what happens in New York, that's what happens in America.' "

In the decade since Sept. 11, 2001, lower Manhattan hasn't just come back. It's transformed. In 2000, 24,000 people lived south of Chambers Street, according to a report released earlier this month by the Downtown Alliance, a business improvement district. Today the population has more than doubled to 56,000.


Not all successes

The transformation hasn't been without hitches. The for-profit Sports Museum of America was financed through tax-exempt Liberty Bonds but never attracted enough visitors to its location near Battery Park to stay afloat and declared bankruptcy shortly after opening. The New York Stock Exchange considered expanding from its current location but decided against it after the attacks. City taxpayers picked up the tab, borrowing $107.9 million to pay for site acquisition and predevelopment costs.

While the finance, insurance and real estate industries still have a huge presence in the area, the business base has diversified around Ground Zero. Of 307 businesses that relocated to Lower Manhattan since 2005, 55 percent were in the professional or creative services industries, according to the report. During the first two years after the attacks, 754 businesses left or disappeared from the area. Today the district is home to 8,428 businesses, 130 more than before Sept. 11, the report said.

"New York got an extraordinary commitment of federal resources," said Carl Weisbrod, a board member of the Lower Manhattan Development Corp., a state entity created to help rebuild the area. The LMDC gave out about $300 million in rent subsidies funded by federal grant money to keep and attract residents to the area "so that the fear of a disintegrating residential community did not materialize even though it was really tough living in lower Manhattan immediately after 9/11."

Weisbrod said that assistance helped maintain a residential population that became the foundation for future development.

The neighborhood also benefited from the $8-billion federal Liberty Bond program that has helped finance the new World Trade Center rising in place of the old Twin Towers. City and state housing finance agencies were authorized to sell $1.6 billion of bonds to finance nearly 5,000 units of housing, including the Frank Gehry-designed silver tower at 8 Spruce St., where studio apartments start at $2,630 a month.


The living's expensive

Developers weren't required to include affordable units, a move that drew criticism. "American taxpayers helped create one of the most expensive neighborhoods in New York City and that's deemed a success," said Bettina Damiani, project director of Good Jobs New York, an economic development watchdog organization. "We built luxury rental units without any guarantee and expectation that any of those apartments would be affordable, not just to your average Joe but how about to the firefighters and first responders that everyone was praising after 9/11. They priced them out entirely."

Larissa Killough moved to Battery Park City in lower Manhattan last year from upstate Cold Spring for its schools after looking around other parts of the city. The 40-year-old advertising art director and mother of two said the area was an oasis in the city.

"It just feels very 'neighborhoody,' diverse, safe and quiet," she said. "And the schools are really great."

Businesses in the area have followed the growth in the residential population. When the New York Legal Assistance Group's lease was coming up at its old office near Penn Station, it looked all over Manhattan for a new space before finding 36,000 square feet at Hanover Square with views of the Statue of Liberty and harbor.

"The first thing that attracted me was the rents were lower," said Yisroel Schulman, president and attorney in charge of the nonprofit organization that provides free civil legal services. The company moved its 115 full-time employees to the new space in June. Schulman wouldn't disclose the per-square-foot rent, but said it was $10 cheaper than the old space.

The average price per square foot of office space in midtown Manhattan in the second quarter of 2011 was $63.35 compared to $39.38 downtown, according to a report by the real estate firm Cushman & Wakefield.

The new location is also more convenient for the attorneys.

"We need access to the court and government offices and those are all down here, those are all within walking distance so that's a tremendous plus for us," said Schulman.

When Learning Tree International, a Virginia-based information technology and management training company, began looking for space in 2005, it decided to leave midtown for 1 New York Plaza at the tip of Manhattan. Lower rents were just one factor, said company president Don Berbary.

"We really look for being in the location where we can provide a quality environment for our business customers who are coming to our learning events," he said. "A big part of our decision-making was based on great access to public transportation. We're right there next to the ferry and the transit lines all merge right there." He said it's a great location with restaurants for customers to enjoy lunch.

In the area directly around Ground Zero, developer Silverstein Properties opened the 52-story 7 World Trade Center in 2006. Today, about 90 percent of its 1.7 million square feet of office space is rented, according to spokesman Bud Perrone. The other Silverstein tower under construction is 4 World Trade Center, with two-thirds of its space leased to the Port Authority and New York City.

The area's tallest building, 1 World Trade Center, has leased a million square feet of its 3 million to publisher Conde Nast. It has only one other tenant so far, the China Center New York.

The arts have also played a role in the area's comeback. In 2002, the Lower Manhattan Cultural Council launched the annual River to River festival that brought live performances by such artists as Wynton Marsalis, Cheryl Crow, Sonic Youth and others to audiences of more than 7 million.

"It right away sent a message to people that there was something going on downtown," said cultural council president Sam Miller. In the beginning, he said, the festival was part of the recovery, but "now it's part of a larger economic development."

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