FOR MERRILL, SIZE COUNTS
MERRILL Lynch executives say the three possible locations in the city for a new headquarters remain candidates, though none of them is ideal.
That’s because with the city popping at the seams, and no ideal location available to accommodate the type of floor plan envisioned by the bulge-bracket firm, none is a sure bet.
What Merrill execs did tell us was that size matters and that the lower Manhattan options at the new World Trade Center and World Financial Center are simply too small and would force the bank to develop a second building in Jersey City.
But the financial giant also worries that Vornado Realty Trust’s Hotel Pennsylvania site, across from Madison Garden, is not attractive enough to employees.
It is also described as too “iffy,” as it needs prolonged civic and city variances and approvals to be as large enough to fill the bank’s needs – at least 3 million square feet with one large 80,000-foot trading floor.
“Hudson Yards [on the West Side near the Javits Center] is just not ready yet and we’re not pioneers,” said one top Merrill executive, who spoke on the condition of anonymity, adding the development plans for an area now made up of railroad tracks is still on the city’s drawing boards.
Competing Brookfield Properties’ and Silverstein Properties’ proposals call for several smaller trading floors, but Merrill traders say they need eye contact with multiple co-workers to make proper bids and therefore feel they must be on one floor.
Brookfield’s proposal for a 500,000-foot expansion of 2 World Financial Center would still leave Merrill 20 percent short on its trading floor needs.
Meanwhile, Silverstein Properties’ upcoming new Tower 3 at the World Trade Center site comes up 15 percent short, and faces another hurdle for Merrill – the rents he’s seeking.
Said the Merrill source of Larry Silverstein: “He’s insane in terms of the numbers he’s throwing around.”
Both the Brookfield and Silverstein sites would require the expense of building and operating a second tower to accommodate a move by 3,000 to 5,000 people who won’t fit into either of the two downtown options.
“We need flexibility going forward. It is a critical [need],” added our source. “[No one wants] to be the bonehead who built us the wrong trading floor 10 years from now.”
Of course, they could put up with any of it anywhere if given some underlying support, i.e., some help with variances and review timelines, some tax relief off this and some energy pumped in from that – stuff that puts competitiveness back into their mix.
That’s because Merrill executives glower as rival Goldman Sachs, after receiving massive subsidies, builds its own 2.1 million foot headquarters smack in the middle of Merrill’s World Financial Center territory.
“They put $600 million into our competitor’s pocket,” complained one Merrill Lynch official. “At a bare minimum, we know that . . . first and foremost, we are at a competitive disadvantage to the guys going up across the street – and they will have rocket speed execution.
“We’re not threatening to move our headquarters to New Jersey – we are being honest and saying we want to remain here, but the city seems indifferent to our needs,” the official continued.
“If they really want New York City to remain the financial capital they need to figure out what they have to do to make the companies competitive and not penalize them.”
A Merrill spokesman declined comment on our findings and a call for a response from Deputy Mayor Dan Doctoroff was not returned by press time.
Jones Lang LaSalle is working with Merrill, which is expected to make a decision in the next few weeks.
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Changes: Isaac Chetrit just bought 989 Sixth Ave. from Leslie Himmel‘s Himmel + Meringoff Properties, which had owned it for 22 years.
This was H+M’s first acquisition back in 1985. The sale was made through Eastern Consolidated, while Jones Lang LaSalle has been appointed to handle leasing.
The LeFrak Organization owns 50 W. 57th St. by itself and also owns 33 W. 57th St. with Vornado Realty Trust.
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Yesterday’s RealShare conference at the Marriott Marquis underlined the current doom and gloom due to the “strike” in the bond markets but was brightened by doses of reality: soon deals will be re-priced and we’ll all get back to business.
“We will come out of it because fear gives way to the desire to make money,” declared wunderkind Ethan Penner, now of Lubert-Adler Partners, who slammed the three credit rating agencies for creating the problems by being “hired by the sellers” and ignoring the true risks.