chapter  2
24 Pages

Economy

Adaptive change is distressing for the people going through it, and getting an organization to adapt its behaviors to thrive in a changed environment is critical in today's world. The city of New York was hit hard on September 11, 2001, in the midst of battling a possible recession. New York City's economy was affected severely, and a newly elected Mayor Bloomberg was given the task of managing this economic crisis. Mayor Bloomberg states, "The September 11 th attack has forced the city to deal with new economic and fiscal conditions. New York City now faces a budget gap for fiscal year 2003 of $4.8 billion."l

Major declines in the city's economy linked directly to the attack can mainly be attributed to the loss of 100,000 private sector jobs, the severe decline in New York City tourism, the loss of $800 million in tax payments due to a 60 percent decline in Wall Street profits, and the decline in Manhattan's market value totaling $230 million in lost revenue2 (see Box 2.1). Decline in the Real Estate Market

Nearly 30 million square feet, or almost 30 percent, of the city's Downtown commercial real estate was damaged or destroyed, resulting in the displacement of around 600 firms and an estimated 100,000 people. Firms responded by moving nearly 30 percent of their employees, some permanently, outside the city.3

Although the real estate market is being hailed as one of the healthier segments of the city's economy in the current recession, the market was certainly affected in 2001 by job cuts and diminishing confidence