Merrill Lynch Weighs Putting Headquarters at Ground ZeroMay 23, 2008
Merrill Lynch is negotiating a deal to build a 70-story headquarters at ground zero, a plan that would make it the first financial firm to return to the 16-acre former World Trade Center site since the terrorist attack destroyed the complex in 2001.
A major step toward a deal was taken Thursday, when the Port Authority of New York and New Jersey voted to change the construction schedule for the towers at ground zero, enabling the developer Larry A. Silverstein to continue talks with Merrill Lynch about the building.
Officials of the Port Authority, the state and the city are optimistic about a Merrill deal, which the officials and the developer hope will spark other corporations’ interest in moving to the site. But the company is also looking for a sizable government subsidy, officials say, which could prompt some stormy bargaining sessions.
Another investment bank, Goldman Sachs, sidestepped the 16-acre trade center parcel, deciding instead to build a $2.4 billion, 43-story headquarters across West Street at Battery Park City.
Merrill is considering a move to what would be a 3 million square foot skyscraper at the northwest corner of Cortlandt and Church Streets. A tower that size would allow Merrill to consolidate 10,000 employees now at 2 and 4 World Financial Center and 222 Broadway. Merrill would prefer to own the building, rather than lease it from Mr. Silverstein, who would nevertheless build it.
Merrill Lynch’s lease at the World Financial Center, across West Street from ground zero, expires in 2013.
“We needed to move quickly to ensure that Merrill Lynch’s plans downtown can in fact be realized,” said Chris Ward, executive director of the Port Authority, which owns the land. “We’re working hand-in-glove with Larry Silverstein to see if that is possible.”
On Thursday, the Port Authority voted to extend the construction deadlines for two towers at ground zero, including Tower 3, the one under consideration by Merrill.
Mr. Silverstein’s development agreement with the Port Authority required him to complete the two office towers along Church Street by the end of 2011. The Port Authority moved the completion date for Tower 3 to June 2012, to allow him time to redesign the foundation for the proposed Merrill tower, which is larger than the building originally planned there. The deadline for Tower 4 was extended to April 2012.
“The six-month schedule adjustment approved today by the Port Authority clearly makes sense,” said Janno Lieber, who oversees the trade center project for Silverstein Properties. “Merrill Lynch is downtown’s largest private-sector employer. This extension gives us the time to design and construct a modified building foundation that could accommodate Merrill’s specialized requirements.”
Last fall, Merrill was in serious negotiations to move its headquarters from its longtime downtown home to the Penn Station area, where Vornado Realty Trust offered to build a skyscraper on the site of the Pennsylvania Hotel.
But the company abandoned the move after suffering billions of dollars of losses in the subprime mortgage crisis. It appeared that Merrill’s fallback plan was to remain as a tenant at the World Financial Center.
But in recent weeks, Merrill began talking in earnest with Mr. Silverstein about a new tower. There are a number of tax breaks and other incentives available at the trade center site. But Merrill wants a more generous deal, similar to the one given to Goldman Sachs – a deal that state and city officials have vowed never to repeat.
Goldman got $1.65 billion in tax-free Liberty Bonds, which will save the bank at least $9 million a year in interest, as well as $115 million in tax breaks and cash grants, leading critics to describe it as an egregious example of corporate welfare.
JPMorgan Chase got a smaller package last summer, when it signed an agreement to move its investment banking operations from Midtown to a site near ground zero, where it planned to build a 42-story, 1.3 million-square-foot tower at the corner of Greenwich and Cedar Streets. However, it recently bought Bear Stearns and Bear Stearns’s Midtown headquarters, where it now plans to put the investment bank. JPMorgan insists that it still wants the downtown development site, where the former Deutsche Bank building is being demolished.