The terrorist attack that toppled the World Trade Center may have destroyed or damaged as much as 30 million square feet of office space, setting off a search for quarters that threatens New York City's economy.

Rebuilding just half of that space - the amount believed completely wiped out - would cost as much as $6 billion at a prevailing cost of $400 per square foot, according to real estate experts. In the meantime, displaced companies, including Lehman Brothers Holdings Inc. and American Express Co., have begun to sign leases for offices in the suburbs.

The question now becomes whether companies moving to the suburbs will return to lower Manhattan, an area that accounts for 10 percent of the New York metropolitan area's economy, when their temporary leases expire.

"There is a very real threat that some companies will move to New Jersey and Westchester County and choose to stay there," said Ray Cirz, a principal with Integra Realty Resources.

It may be seven to 10 years before lower Manhattan begins to recover, said James Meiskin, president of Plymouth Partners, a property brokerage. Meiskin is working with "three multinational" companies who were trade center tenants and want to move from the city. He declined to identify them.

More than 400,000, or 10 percent, of New York City's workers are located downtown. About 40,000 people were employed at the trade center alone, a complex that contained about 10 million square feet of space before it was hit by two hijacked airliners. Morgan Stanley, Dean Witter & Co., AON Corp. and Empire Blue Cross and Blue Shield were among the biggest tenants.

Wide Destruction

The destruction stretched well beyond the twin towers. Four other buildings in the trade center complex, 4, 5, 6, and 7 World Trade Center, were destroyed. One Liberty Plaza, three buildings at the World Financial Center, 1 Bankers Trust Plaza, 140 West St., 90 Church St. and 195 Broadway also suffered damage.

"We're talking about the need to rebuild a whole district of the city," said Robert Yaro, executive director of the Regional Plan Association.

About 650 tenants will need to find new offices. There's enough space for all of them in Manhattan but not all of it is suitable because of location or condition. Some is in buildings that were built as factories and converted during the Internet boom.

Space Needs

Large business requiring blocks of 400,000 square feet or more will have the hardest time finding new accommodations in Manhattan, according to CoStar Group Inc., a property research firm. At the other end of the spectrum, CoStar counted 3,549 locations suitable for tenants requiring less than 25,000 square feet. Almost 500 of the trade center's tenants fit that criteria.

"If all of the tenants displaced from the World Trade Center were to relocate within Manhattan, we believe the overall vacancy rate could drop to an unprecedented 4.3 percent" from 7.4 percent, said Jay Spivey, CoStar director of analytics.

The suburbs have plenty of space. About 22 million square feet is available in northern New Jersey, southern Connecticut, Long Island, and New York's Westchester County, according to Ray O'Keefe, regional managing director of Grubb & Ellis Co., a property brokerage firm.

"Within the next few days, everyone could be in a new location," he said.

American Express, whose headquarters is at the World Financial Center, has already moved workers to sites in New Jersey. The company has signed a 3-year lease for 300,000 square feet of space in Parsippnay, New Jersey, and will be taking over 150,000 square feet in Short Hills, according to Peter Yanotta, a New Jersey-based property broker at Equis Corp., which advises companies on their real estate. American Express spokeswoman Molly Faust confirmed only that the company is looking at sites in those towns.

No Gouging

Lehman may not be able to move back into 3 World Financial Center for six months, according to Thomas Russo, vice chairman. The securities firm yesterday signed a lease for 200,000 square feet at 70 Hudson St. in Jersey City, space once occupied by Datek Securities, said Yanotta.

"I have not run across a single person who has tried to take advantage of the situation," said Russo. "People are not giving real estate away, but people are looking to rent on their cost basis."

The attack could end up being a boon to developers, who have had to postpone projects because of the slowing economy.

New York Mayor Rudolph Giuliani said he supports rebuilding the trade center. New York developer Larry Silverstein took control of the buildings in July under a 99-year lease purchased with a partner for $2.3 billion. His spokesman, Howard Rubenstein, said Silverstein wants to help rebuild the complex. His intentions were earlier reported in the Wall Street Journal.

New York real estate leaders, including Jerry Speyer of Tishman Speyer Properties and Bert Resnick of Jack Resnick & Sons Inc., met with Giuliani Wednesday to discuss replacing the new space.

Steven Spinola, chairman of the Real Estate Board of New York said the developers raised the ideas of offering tax breaks for building and accelerating the approval of projects hung up in the zoning process.

"We need special powers to expedite the approval process and we need to find ways to keep the cost of construction down," said Spinola.

Some real estate executives said the plans are premature. Meiskin said he doubted the city would act fast to provide tax breaks or other subsidies at a time when a slowing economy has pushed up vacancy rates. Some developers have found it harder to fill buildings under construction or postponed projects, such as one slated for above the Port Authority bus Terminal on 42nd Street.

"There are some prime sites out there waiting for an anchor tenant," said John Lyons, head of Granite Partners, a New York based real estate investment banking firm.

Delayed Plans

Douglas Durst and Speyer are assembling land at 42nd Street and Sixth Avenue for a 48-story building. Vornado Realty Trust and Lawrence Ruben Co. are waiting to sign an anchor tenant for the $500-million bus terminal project.

Also, Brookfield Properties Corp. and Harvery Schulweis have sites on the West Side of Midtown ready to be developed, while a group including Sheldon Solow and Fisher Brothers Realty Corp. plan to develop 9.2 acres along the East River once owned by Consolidated Edison Inc.

Some developers said they believe companies will remain in New York even with high rents so they can be close to clients and have access to services they would be denied elsewhere.

"You need communication. You need the high tech," said Sam LeFrak, chairman of the LeFrak Organization "You can't move out to the boondocks."