There is no question that the Sept. 11 terrorist attacks have severely interrupted and damaged New York as a global command and control center. The question now is whether those attacks will reshape the way we build our world cities in the future.
Among the World Trade Center tenants, there were companies from 28 countries, including many with direct connections to London and Tokyo, the other two "primary" world cities.
In addition to many U.S. firms, a large number of foreign-owned companies in finance and producer services lost their offices, offices that maintained connections throughout the world economy.
In this sense, the tripartite organization of the world economy has been dislocated. New York has been losing not just a lot of money and business, but a lot of control. In this fast-paced age of information, a global city is incapacitated without proper communications and operational offices.
In the long run, New York City might recover and even come back stronger, as Mayor Rudolph Guiliani has proclaimed. But much of that will depend on how Lower Manhattan is rebuilt.
The scope of the damage is certainly enormous:
- About 30 million square feet of office space was destroyed, equal to about 20 percent of all office space in Lower Manhattan. About 1,000 offices were destroyed and another 14,000 businesses in the surrounding area immediately affected.
- Within three weeks, an estimated 120,000 people in Manhattan had lost their jobs because of business closings and layoffs.
- Damage is estimated at $30 billion, making this the most expensive single disaster in U.S. history.
- Incalculable is the loss of huge numbers of paper and digital documents, archives and databases, which will hamper businesses for a long time to come.
Indeed, the rebuilding of Manhattan will test whether some fundamental laws of the geographic clustering of corporate activity will hold up in a new age of terrorism.
The shape of major world cities as they emerged in the second half of the 20th century was a dense and compact center for finance and producer services. (Compare, for example, the square mile that is the city of London.)
One of the things that has kept corporate activity concentrated in places such as Lower Manhattan is the need for face-to-face business contacts in a sector in which personal contacts are vital and in which time and timing is everything.
One of the things that has more recently driven companies away from such global city centers is the price of real estate, "dis-economies" of scale and rapidly developing clusters of similar activity in new places such as banking in Charlotte, N.C.
An added incentive for de-concentration may be risk of a new kind: terrorism. And this could result in a devolution of economic power down the urban hierarchy.
The question is whether all or most of the displaced companies will eventually return to Lower Manhattan and restore the central business district as we know it.
The big financial firms previously housed in the twin towers of the World Trade Center have set up shop outside Manhattan. Lehman Brothers, for example, has already been operating for a few weeks in facilities in New Jersey.
A number of these companies might not wish to wait for new property developments in New York to become available or might not wish to settle temporarily in other spaces in Manhattan and pay rents that are likely to be higher than before.
Finally, the ways that this part of Lower Manhattan will be rebuilt will in part depend on the reaction to this crisis by the large insurance companies.
Not only are they going to be digging deep into their pockets, they are also likely to come with new kinds of policies with exclusions or extra premiums for high-rise and icon buildings, possibly a further deterrent to corporations.
Undoubtedly, New York will be back on its feet, though perhaps not as preeminent as it was before Sept. 11. The world city that is New York faces an unprecedented challenge. But whether the challenge is met or not, New York will come out of all this once again as a trendsetter for cities around the world.
Jan Nijman is professor of Geography and Regional Studies at the University of Miami.