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 The Five Borough Report
A New Phase in Lower Manhattan,  by Saskia Sassen

There are multiple issues that need to go into a consideration of the future of Lower Manhattan: issues concerned with social justice, equitable distribution of the funds for its rebuilding so many can benefit, ensuring that Lower Manhattan is a place of diversity and mixed economic activities, preventing it from becoming a new luxury citadel. All of these aspects deserve our full attention and our efforts to make them happen. Here I will not address these enormously important considerations. I have been asked to address the future of Lower Manhattan not in terms of what it ought to be but what I think it is likely to be.
 
My question then is what will rather than what should happen in Lower Manhattan. 
 
Many firms have left. New Jersey is having its largest ever real estate boom as a consequence of these departures: Wall Street firms have taken 3.4 million square feet of office space in New Jersey, most of it in a few specific locations. This is equivalent to one-third of the total office space represented by the World Trade Center. Connecticut has been the other destination of preference for Wall Street firms. Even if new space taken up in both of these states does not quite account for the total of 218 acres of office space of the WTC (equivalent to the total office space in downtown Atlanta!)
 
Many of these firms will not come back; they will stay in Connecticut and in New Jersey. But, my reading of the constraints under which these financial services firms function suggests that the top levels in these firms, those sectors most involved with high level innovations and speculative investments, will have to come back. The large financial services firms with several thousand employees in Lower Manhattan, do not need that many people there. Just a few hundred of their top personnel. In many ways, there was much inertia: Goldman Sachs did not need its “campus” with 10,000 employees in Lower Maqnhattan. Brutal as it sounds, the horrible attack that devastated Lower Manhattan, cleared the way for a far tighter set of locational patterns: only those firms that really need to be part of complex and dense networks need to be located downtown. 
 
Lower Manhattan will again be a key set of brain functions for the most speculative, globalized, innovative financial services firms. But that represents only a small share of the total employment of most of these firms and a minority of these firms, many of which have today become rather standardized and much less innovative and daring than a decade ago. The key question in this context is whether the thinning of this high-profit sector in Lower Manhattan makes room for a whole new set of sectors that benefit from access to multiple state of the art specialized services and infrastructure. 
 
Lower Manhattan has gone through new phases many times before. Looking just at the most recent decades, we can identify two phases. In the 1980s, after the so-called Third World debt crisis, the large commercial banks and insurance companies which had populated lower Manhattan, began to leave, and this made room for a whole new world of financial services firms, many small and highly innovative firms. This launched a whole new phase in its economic history. That phase has come to an end: today we see the massive departure of these same financial services firms. The end of this economic phase that saw the rise of the financial services firms has been far more abrupt than it would have in the absence of the massive attack. The attack brutally eliminated inertia, an inertia partly rooted in the enormous financial capabilities of many of these firms that allowed them to pay enormous rents and added costs for being located in the Wall Street area. 
 
The question now is whether the end of the absolute dominance of rich financial services firms in Lower Manhattan launches yet another phase in its long and intense history. In my reading of the matter, this is indeed the case.
 
In addition to the top level professionals and decision makers of the financial services sector that will either stay or return, new sectors will seize the opportunity to move to Lower Manhattan. We are already seeing this with new media firms, which benefit from the intense proximity to multiple types of expertise and resources (financial, legal, accounting) which they need insofar as they operate in highly speculative and globalized sectors. 
 
A third group will be a whole new set of firms that we cannot even foresee at this time because they will be part of new cutting edge sectors that mix different types of expertise and resources —hybrids that will become the norm in the near future, just like software developers were hybrids in the 1970s and then became a new sector in the 1980s. Part of this might be the development of hybrids around high-tech and bio tech, but it might also involve types of firms we have not even thought about, that remain to be invented and for which it might take us a few years to understand how to classify them.
 
It is perhaps one of the great ironies of our current global information age, that one key element in the handling of these increasingly complex tasks is access to dense environments where people with multiple talents and experience and insights interact easily and frequently. Manhattan’s Wall Street District and London’s Square Mile, are such environments. It brings home yet another irony in our global information economy: social connectivity is as important in many of the most strategic and complex sectors as technical connectivity. 
 
Saskia Sassen is the Ralph Lewis Professor of Sociology at the University of Chicago. Her latest book is Guests and Aliens (New York: New Press 1999). 
 
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