Ground Zero building might be off

The Baltimore Sun

NEW YORK -- JPMorgan Chase & Co. will move its investment bank into the headquarters of Bear Stearns Cos., and is reviewing its plans to build a tower at the World Trade Center site, a spokesman said yesterday.

New York-based JPMorgan, the third-largest U.S. bank, said in June that it would build a $2 billion, 40-story skyscraper at Ground Zero, where the former Deutsche Bank AG building is being demolished. The bank had planned to move 7,000 investment banking employees to Lower Manhattan and renovate its corporate headquarters in Midtown.

"The JPMorgan investment bank intends to relocate to the Bear Stearns building in Midtown rather than the facility being planned downtown," JPMorgan spokesman Joe Evangelisti said. "We still see the downtown location as a valuable option for us and we are still looking at our options there."

With the purchase of Bear Stearns for about $260 million, JPMorgan stands to gain the firm's six-year-old, 45-story office building, which is worth about $1.5 billion, or more than $1,200 a square foot, said Dan Fasulo, director of market analysis for Real Capital Analytics Inc. in New York. Bear Stearns sits across the street from JPMorgan's Midtown Manhattan offices and has underground access to Grand Central Terminal, where 700,000 commuters pass every day. The tower is octagonal, giving it eight corner offices on most floors.

The Bear Stearns building "would be on the top of the list for every major real estate investor," Fasulo said.

Demolition of the former Deutsche Bank tower has been slowed by disputes between local agencies and the Environmental Protection Agency.

A July 18 blaze there killed two firefighters. The Lower Manhattan Development Corp., which owns the site, said last month that it had approved an amended plan to decontaminate and then tear down the building.

The site is scheduled to be turned over to JPMorgan by September according to the terms of the original deal, though JPMorgan's agreement with the Port Authority of New York and New Jersey, which controls development in the Ground Zero area, allows the deadline to be extended a year.

Vacancy rates for Manhattan office buildings in the fourth quarter of 2007 were 5.8 percent for the Midtown area and 6.2 percent for downtown, according to Cushman & Wakefield Inc., the world's largest privately owned commercial real estate broker. The national office vacancy rate was 9.7 percent, the broker said.

The 1.2 million-square-foot Bear Stearns building has seven open floors that are each 42,000 square feet.

The plan for JPMorgan's downtown tower had called for six trading floors, each with up to 60,000 square feet, the company said.

Bear Stearns bought the site of its Midtown tower in 1997 from British developer Howard Ronson with the help of tax incentives requiring the company to stay in New York for at least 50 years, according to New York 2000: Architecture and Urbanism Between the Bicentennial and the Millennium by Robert A.M. Stern, David Fishman and Jacob Tilove.

Bear Stearns was permitted to build a 45-story tower, designed by Skidmore Owings & Merrill's David Childs, thanks to 275,000 square feet of unused air rights previously allotted to Grand Central Terminal. The building was completed in 2001.

In addition to its tower, Bear Stearns occupies 255,000 square feet at 237 Park Ave.; 144,000 square feet at 320 Park Ave. (owned by Mutual of America Life Insurance); and 308,000 square feet at 1 Metrotech Center in Brooklyn (owned by Forest City Ratner Cos.), according to CoStar Group Inc., a real estate information service.

The value of Bear Stearns' headquarters has not dropped as far as the company's stock has, Leo Wells, founder and president of Wells Capital Inc. in Norcross, Ga., told Bloomberg TV.

"It's still a great piece of property, it's in a great location, so I think the real estate will hold up very well," Wells said.

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