Brooklyn's Progress
January 2002

Brooklyn Chamber President Kenneth Adams recently testified at a December 6 hearing on the rebuilding of Lower Manhattan and New York City before the New York State Assembly Committee on Economic Development, Job Creation Commerce and Industry. Below is his testimony: Good morning. I am Kenneth Adams, president of the Brooklyn Chamber of Commerce. The Brooklyn Chamber was established in 1918 to provide assistance to Brooklyn businesses and promote the economic development of our borough. On behalf the Brooklyn Chamber’s 1,300 members, many of which are now feeling the economic impact of the September 11 terrorist attacks, I would like to thank Speaker Silver, Assemblyman Schimminger, Assemblyman Sweeney and the New York State Assembly for your leadership in addressing this issue and for holding these hearings today. I am here to voice the Brooklyn Chamber’s support for the comprehensive rebuilding of the Lower Manhattan economy and suggest two strategies for the economic development of New York City. We at the Brooklyn Chamber have always acknowledged the direct business connection between Lower Manhattan and Brooklyn. Since even before the construction of the Brooklyn Bridge, the economies of Lower Manhattan and Brooklyn have been closely linked. Evidence of this link is everywhere-from the thousands of Brooklyn residents who walk across the Brooklyn Bridge and pack the subways every morning en route to their jobs in Lower Manhattan to the presence of MetroTech Center, where tenants provide crucial technological and operations support to the financial markets and corporate community of Lower Manhattan. After the tragic events of September 11, we have realized just how strong this connection truly is. In an effort to better understand the effects of the September 11 tragedy on the Brooklyn business community, the Brooklyn Chamber recently surveyed its membership on the economic impacts of the attacks. Of the 175 respondents, which represent 13 percent of our membership, more than half said they had customers in Manhattan below 14th Street and 36 percent said that they relied on products or services provided by Lower Manhattan vendors. The devastating blow to the Lower Manhattan economy has resulted in lost contracts, delayed deliveries and crucial interruption of business activity for many Brooklyn companies. Findings from the Brooklyn Chamber’s survey indicate greater economic damage in Brooklyn than we imagined. For example: 62 percent of survey respondents reported a decline in revenues directly resulting from the terrorist attacks; 24 percent of respondents witnessed a drop in revenue of at least 20 percent; and 12 percent of respondents stated that they had already laid off employees as direct result of the September 11 tragedy. Our survey results imply that the Brooklyn business community will clearly benefit from the rebuilding of Lower Manhattan. Any actions which New York State takes to stem the flow of business and jobs from Lower Manhattan and stimulate the downtown economy will have important economic benefits in Brooklyn. For this reason, the Brooklyn Chamber encourages the New York State Legislature to work toward the comprehensive rebuilding of Lower Manhattan -from the creation of incentives to encourage companies to relocate or remain downtown to the improvement of transportation links and infrastructure. While the rebuilding effort must primarily focus on improving business conditions and infrastructure in Lower Manhattan, the State Legislature should also consider ways to strengthen the entire New York City economy. Two suggestions for strengthening the New York City economy include encouraging the creation of additional commercial office space within business districts outside of Manhattan and revisiting the State’s procurement policy to encourage the purchase of goods and services produced by economically impacted New York City companies. The events of September 11 have resulted in the loss of crucial office tenants and jobs from Lower Manhattan. Unfortunately, in many cases, these companies have elected to relocate offices outside of New York City. A recent report by GRID Magazine stated that as of November 1, seven major World Trade Center tenants have signed leases totaling approximately 1.3 million square feet of office space outside of the five boroughs. The resulting loss of jobs and tax revenue has produced substantial challenges for the New York City economy. One reason for the loss of businesses from New York City was the lack of immediately available and affordable Class A office space within the five boroughs. Companies looking to quickly relocate and keep costs under control were hard pressed to find large blocks of lower-priced, ready to rent office space. Most available office options were located in Midtown, where rents, according to Sentor Schumer’s Group of 35 Report, average $15 per square foot higher than Lower Manhattan. Immediate opportunities in more affordable business districts, such as Downtown Brooklyn and Long Island City, were essentially non-existent. As a result, some companies chose to relocate outside of New York City and New York State. We fear that this trend will continue in the future unless we do something about it. In the coming years, Lower Manhattan companies will continue to consider siting back office operations and other functions outside of Lower Manhattan. While some will be driven by the necessity of cutting costs through lower rent, others will be seeking geographic diversification of office operations that do not have to be housed at their corporate headquarters. In order to halt this trend, New York State and New York City must work to create opportunities for the development of office space in business districts outside of Lower and Midtown Manhattan. Areas such as Downtown Brooklyn and Long Island City have already demonstrated their viability as locations for back office operations of major Manhattan corporations. Aside from offering separate and distinct power grids and telephone and fiber-optic networks, these districts offer rents substantially less than Lower Manhattan’s. Additionally, these areas also offer the development potential to allow for the construction of a clustering of buildings for office uses. Recent studies of downtown Brooklyn have demonstrated the potential for the development of an additional 12 million square feet of office space in the area surrounding MetroTech Center. New York State can play a key role in stimulating the growth of New York City’s secondary office districts. Through increasing the number of development sites, providing incentives for land acquisition and development and creating an environment where expedited development can occur, New York State can create additional opportunities for the retention of quality companies and jobs within the five boroughs. A second way in which New York State can assist in the recovery of the New York City economy is through increased procurement opportunities for New York City-based companies. In this time of need, New York State should consider creating a short-term, emergency program of contract set-asides and bid allowances giving preference to New York City companies that can demonstrate direct economic impact as a result of the September 11. While we understand that such a program would be difficult to operate on a long term basis, we believe that a limited, short-term program would provide much-needed opportunities for many of New York City’s hardest hit companies. We are confident that the New York State Assembly will work toward the rebuilding of Lower Manhattan and the New York City economy. Based on the Brooklyn Chamber’s experience, the New York State Assembly has proven its ability to think outside the box when it comes to economic development, supporting innovative and unique programs that work towards the growth of the local economy and the creation of jobs within New York City. Thank you for your attention.