JPMorgan might flip WTC site
JPMorgan Chase, which scrapped plans to relocate its investment banking headquarters to Lower Manhattan earlier this week, might still acquire the former Deutsche Bank building site at 5 World Trade Center and flip the property, sources said.
JPMorgan Chase might either acquire the development rights for 130 Liberty Street and possibly sell them, or even proceed with a scaled-down office building on the site and then sell it for a profit, said a source who asked to remain anonymous.
“The more likely scenario is they’re going to build some space,” the source said.
JPMorgan declined comment. Assembly Speaker Sheldon Silver, who spoke to senior bank officials, was told that the firm remains committed to the site.
“They have told him they intend to stay at that site,” said Dan Weiler, a spokesman for Silver.
JPMorgan entered an agreement in June 2007 to relocate its investment banking headquarters to the former Deutsche Bank site and develop a 1.3-million-square-foot tower that would house 7,000 employees. That deal made JPMorgan the first firm to agree to relocate to the World Trade Center after the 2001 terror attacks.
The agreement called for JPMorgan to pay $290 million to the Port Authority of New York and New Jersey for a 92-year lease. Under the plan, JPMorgan would have invested up to $2 billion in the project, but would have received hundreds of millions of dollars in government incentives and rent reductions to relocate to Lower Manhattan. The project ran into lengthy delays: the tower, contaminated and badly damaged on 9/11, required a complex dismantling that was only further complicated by a fire last August that killed two firefighters.
JPMorgan’s plans changed on Sunday, when it agreed to buy Bear Stearns in a $236 million firesale, as the investment bank faced imminent collapse after its mortgage-backed investments crashed.
As part of the acquisition, JPMorgan Chase inherited Bear Stearns’ six-year-old headquarters building at 383 Madison Avenue, which has an estimated worth of more than $1.2 billion. JPMorgan now plans on moving its investment banking business from the former Union Carbide building at 270 Park Avenue Across The Street to the Madison Avenue building. It remains unclear what the firm will do with 270 Park Avenue.
A report in the New York Sun yesterday indicated that the Port Authority of New York and New Jersey would support a residential or mixed-use tower at 130 Liberty Street, instead of a commercial building. Before JPMorgan’s 2007 agreement, Mayor Michael Bloomberg had publicly backed a residential development for the site, but other public officials said that Lower Manhattan needed more office space.
Robert Stella, a principal and executive vice president at CresaPartners, said uncertainty in the capital markets now makes it difficult to judge whether Lower Manhattan needs more commercial or residential space. If another major investment bank reaches the brink of collapse like Bear Stearns did, the commercial real estate market would seem unstable; at the same time, several major residential developments have been slowed due to a lack of liquidity.
“Right now all bets are off on the timing, because you don’t know how the economy is going to turn,” Stella said.
Elizabeth Berger, president of the Downtown Alliance, said it’s too early to speculate about what may happen on the site, but added that the organization continues to back commercial development at the location.
“We always thought a commercial tower belonged on that site,” said Berger. “We think a commercial tower is completely appropriate.”
Calls to the Port Authority were not immediately returned.