New York City’s shortage of office space hampers its economic future

City Journal reports:

In the immediate aftermath of 9/11, New York endured an unprecedented wave of corporate relocations, as companies left homeless by the terrorist attack moved tens of thousands of jobs out of the city. Today, Gotham faces another wave of relocations, prompted this time by the tortuous five-year effort to replace offices lost at Ground Zero and by the city’s inability to create alternative commercial districts for businesses that can’t afford to pay premium prices for existing Manhattan office space.

Over the summer, two big financial-services firms, Citigroup and Deutsche Bank, decided to shift some 2,200 jobs to Jersey City. For Citigroup, it’s the second major relocation to New Jersey in just 24 months. Smaller firms like UBS, Royal Bank of Scotland, and Morrow & Co. have also fled the city over the last two years, to Westchester and Connecticut. The relocations have spurred suburban developers to ramp up office projects. The LeFrak organization, for example, is now eyeing its eighth office tower in Newport City in New Jersey to accommodate new demand from Manhattan.

It’s easy to see what’s behind such moves. The terrorist strike destroyed some 11 million square feet of Gotham office space, enough to house nearly 50,000 jobs. Since then, there’s been little commercial office building in the city, apart from several projects that were already on the drawing boards, like developer Douglas Durst’s 42nd Street tower. That dearth of new building is a key reason that office vacancy rates have shrunk to pre-9/11 levels, even though the city still has some 50,000 fewer jobs than it did before the attack.

Some cities don't want job growth.