Most of the talk in New York real estate circles these days has centered on the national recession, the pain it has caused the NYC apartment market, and when it's all going to end.  The recent Deutche Bank report has fueled the debate, as have recent prognostications of a global recovery – most of latter having stemmed from perpetually overly-optimistic business writers. 

While the perennial debate between optimists and pessimists plays itself out in the context of shrinking real estate valuations, the form that the eventual recovery will take is becoming clear.  The eventual construction resulting from the wretched attacks of September 11th with aid a revitalized downtown New York real estate market.  Manhattan is typically the strongest part of the New York apartment market, and changes in commercial real estate supply and demand will, in the long run, make the downtown area even more attractive to businesses and their employees. 

A planned strengthening of public transport systems will also make the downtown area a more attractive place for businesses looking to headquarter themselves in New York City or relocate from other parts of the city. 

Similarly, the strengthening of residential neighborhoods near the downtown area that occurred during the previous expansion has attracted additional retail activity. 

In some ways, it seems like an odd argument:  In the downtown heart of business activity in the business capitol of the United States, additional business activity will help lead the Manhattan real estate market rebound more generally.  

There are four major factors, though, that have pointed some observers towards such a conclusion:  First, the reconstruction of areas that were damaged or destroyed during the terrorist acts of September 11th.  Second, the changed market dynamics of residential neighborhoods near to the downtown area.  Third, a resulting further rejuvenation of retail activity.  And fourth, an uptick in supply and concordant downturn in demand for commercial real estate that, over the long run, will make the downtown an especially attractive place for new or relocating businesses. 

The weak US dollar will similarly attract additional foreign demand for both the commercial and residential real estate market.  A disproportionate amount of that demand may end up being concentrated in the downtown area. 

It's not enough to fuel a recovery by itself – or even come close.  But what is clear is that when that recovery comes, look to downtown real estate and related neighborhoods to help lead the way.