The metropolitan region is finally seeing a return of commercial office development. Within six years, more than 10 million square feet of office space is expected to be completed in Lower Manhattan. On May 23, Silverstein Properties will officially open the 1.7 million-square-foot 7 World Trade Center. Construction is under way for the 43-story, 1.9 million-square-foot new world headquarters of Goldman Sachs on site 26 in Battery Park City. Goldman is the first company to build headquarters in Lower Manhattan since JPMorgan constructed its Wall Street home in 1988.

Zoning has been approved for 4.5 million square feet of office space as part of the Downtown Brooklyn Plan. An additional 1.9 million square feet is expected to be built by Forest City Ratner at the Atlantic Yards, the proposed home of the Nets. Tishman Speyer Properties plans to build 3.5 million square feet in Gotham Center in Long Island City. Other developers are planning offices in Long Island City, Jamaica, and the Bronx. For the first time in more than two decades, office buildings are planned for Westchester. The New Jersey waterfront, to which many companies from Lower Manhattan and Midtown relocated, has at least 18 million square feet of space and more planned.

Can New York City absorb all the office space that is proposed to be built over the next decade?

A number of leaders in the industry and business weighed in on the viability of office space in the city. The president of Swig Equities, Kent Swig, whose firm owns 4.1 million square feet of office space in Lower Manhattan, said, “The amount of space we are adding over the next 15 years is not much more than the addition to the historic office supply. I do not think buildings in Lower Manhattan will be built without pre-leasing.

“Downtown needs huge, modern office space to attract and accommodate large tenants. Today, the city has a major problem: Rents in Midtown are skyrocketing, and there is a need for alternative spaces to retain companies in New York. How many businesses think they can spend $80 to $90 a square foot in Midtown? Lower Manhattan offers lower price with great incentives.”

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The president of the real estate division of Parish of Trinity Church, Carl Weisbrod – whose church is one of Lower Manhattan’s largest owners of real estate – is the immediate past president of the Alliance for Downtown. He said, “I believe the agreement to move forward on the WTC site resolves the major market uncertainty that has made commercial tenants reluctant to commit to large blocks of space in Lower Manhattan. In view of the historic rental price disparity now between Midtown and downtown, together with the available downtown incentives, I believe space in Lower Manhattan will be absorbed as quickly as it becomes available, assuming the economy in New York and in the nation remains strong.”

The chairman of the executive committee of GVA Williams, Michael Cohen, said, “I don’t believe there is any doubt that 7 World Trade Center will lease successfully. Because of shortage of space in the city, the building should be absorbed during this current market cycle. Tenants will perceive it to be a bargain compared with comparable Midtown buildings. This has been Larry Silverstein’s strategy all along, and he’s going to be proved right.”

The president of the Brooklyn Chamber of Commerce, Kenneth Adams, said, “Midtown is corporate headquarters, downtown Brooklyn is the home of essential functions for banking and insurance, and Lower Manhattan is Wall Street and a construction site. Incentives, like REAP, help business districts such as downtown Brooklyn, Lower Manhattan, and Long Island City to better compete for tenants against New Jersey and Connecticut. The challenge is to create incentives that attract new taxpayers to the city and the state; to continue to drain more from the existing tax base is untenable. Locally, a healthy competition between NYC submarkets is generally a good thing. When that leads to new businesses coming to any one of these districts, the entire city wins.”

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As may be expected, not all industry leaders are optimistic. The co-chairman of the real estate securities portfolio manager Cohen & Steers, Marty Cohen, is cautious about Lower Manhattan. He said, “Initially, this is a very scary since oversupply is the perennial killer. Sometime in the next few years, we could very well have an economic downturn. If oversupply is the killer, then reduced demand is the undertaker. Though it is tempting to believe, I don’t believe the real estate cycle has been repealed.”

A principal at Koeppel Companies, Caleb Koeppel, whose family has owned the landmark 26 Broadway for more than 50 years, said, “It is history repeated. They’re going to throw a ton of space on the market and destroy an already weak market.”

The president of Mack-Cali Realty Corporation, Mitchell Hersh, said, “Prior to recent announcements, the only real competitive Lower Manhattan building in the market is 7 WTC. This building has had substantial difficulty in leasing space due to a variety of issues, including uncertainty as to the shape of Lower Manhattan redevelopment, infrastructure issues, and the concern among the corporate community relative to future threats of terrorism – and the impact this could have on their businesses and business continuity.

“Jersey City is clearly a preferred market and is being considered by a number of Midtown companies. It has a proven track record, cost of occupancy advantages, as of right incentive programs, a very diverse and wide labor pool, a wealth of affordable housing, great transportation infrastructure, great amenities, and a lot less congestion than New York City.”

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Many real estate leaders are bullish on commercial development in downtown Brooklyn and Long Island City. The president of Shalom Zuckerbrot Realty and a principal at Octagon Properties, Frank Zuckerbrot, said, “Downtown Brooklyn is a mature office market, although it still lacks the real liquidity in terms of leasing velocity. It has excellent mass transportation infrastructure and established retail businesses. The area is in demand and should be able to absorb new office space”.

The president of Brause Realty and chairman of the Long Island City Business Improvement District, David Brause, said he is encouraged that Midtown tenants are receptive to the savings offered in new space located a subway stop away from Manhattan.

Mr. Brause said that the effective rents for Long Island City are in the low $20s per square foot, while similar space at the Bank of America Tower across from Bryant Park is projected to lease for $100 a square foot.

“If a major tenant plans to lease one million square feet, the annual savings for leasing in LIC is $75 million per year and over $1.5 billion over a 20-year term,” he said.

Mr. Zuckerbrot, said, that Long Island City – while being the city’s targeted area for major office development – will have a difficult time competing with downtown because it is not yet an established office market complete with amenities.

“Initially, the city was going to provide incentive for companies to relocate to this new central business district,” Mr. Zuckerbrot said, “however, with the same incentives being offered for downtown, this area will have difficult time competing for those occupants. In addition, should city, state, and federal government agencies move to downtown Manhattan, this will be a blow to the LIC redevelopment process which would have benefited from some of these tenancies.”

I agree with the executive director at Cushman & Wakefield, Glenn Markman, when he says, “Current estimates are that, with modest job growth over the next 10 years, New York City could see demand for new office space reach 28 million square feet by 2016. To meet this demand, office space has to be developed all over the city. Midtown firms that require large blocks of space will have to be more open-minded regarding alternative locations like downtown Manhattan, Brooklyn, and Long Island City.”

Mr. Stoler is a TV broadcaster and senior vice president at First American Title Insurance Company of New York. He can be reached at mstoler@firstamny.com.