Honors Program Theses


Open Access Honors Program Thesis

First Advisor

Art Cox, Advisor


Terrorism--Economic aspects--New York (State)--New York; Commercial real estate--New York (State)--New York;


The September 11, 2001 terrorist attacks (“9/11”) caused major loss of human life, financial resources, and infrastructure. Within hours, over 30 million square feet of real estate in Downtown Manhattan was lost, creating an unprecedented change in supply and demand for real estate in the area. Hundreds of companies were directly affected by the loss of their offices and business fixtures, and were forced to quickly develop plans for how and where to resume work (“A Look at Former World Trade Center Tenants,” 2002). Property owners – many of whom owned the then damaged or nonexistent buildings as ground leases – were responsible for clean up and construction of a new skyscraper at their own expense, even though they invested in the property based on the assumption that the building would remain as is and fully operational during their ownership. This was an extensive financial burden for property owners and created fear amongst commercial real estate investors, especially immediately after the attacks when it was unclear as to whether the government and the Port Authority would allow the damaged sites to be rebuilt.

Property owners had to work extensively with the government in order to redevelop the area. Each party had a unique vision for how to rebuild, with some arguing that the area should be left as-is, some believing it should become a memorial, and others arguing that high-rise buildings needed to be redeveloped to show the world the strength of New York. Ultimately, a compromise was met with the area featuring memorials in the footprints of the former World Trade Centers, an underground memorial museum, five high-rise office towers, and a state-ofthe-art transit station. This redevelopment provides remembrance of the lives lost, functional and much needed real estate, and acts as a symbol of the strength and commitment of the government, investors, and New Yorkers.

Redeveloping the damaged area instilled confidence in businesses and property owners whose support was crucial for the success of the rebuild. However, that confidence was not enough to fully mitigate the impacts of 9/11 on the real estate market. Similar to the economy, the real estate market responds quickly to major political changes, world events, and changes in consumer patterns. The 9/11 attacks caused extreme panic and changed the dynamics of the entire world, which in turn had an impact on both the economy and the real estate market, as will be further analyzed in this research.

Unfortunately, there is always the risk of massive loss of infrastructure due to terrorism, natural disaster, or human error, and therefore an event with impacts similar to 9/11 could happen again. Yet even with this risk, there is very little centralized, longitudinal research regarding the impacts of 9/11 on the real estate market. This study aims to fill the gap in research by providing centralized analysis of the Manhattan office market’s performance as a result of 9/11. By analyzing the actions taken in response to 9/11, as well as the impact to financial markets and property performance, investors can be aware of the risks and how to best mitigate them. To compare the performance of the market both before and after the attacks, a two-step analysis was completed. First, a literature review was utilized to compile data from governmental and industry-specific publications issued after the attacks. Second, trend analysis on economic and property performance statistics from 1990 to 2010 was completed. This two part analysis sought to answer the following research questions:

1) What was the financial and economic impact of the 9/11 terrorist attacks?

2) What was the extent and impact of governmental aid in rebuilding Downtown Manhattan?

3) How did vacancy and rental rates in Manhattan respond to the sudden loss of Class A office space?

By analyzing the actions taken in response to 9/11, as well as the impact to property performance, investors will gain a better understanding of the risks associated with investing in New York City or a comparable location.

Year of Submission



Department of Finance

University Honors Designation

A thesis submitted in partial fulfillment of the requirements for the designation University Honors

Date Original


Object Description

1 PDF file (32 pages)



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Real Estate Commons