Merrill Restarts Talks to Move Base to WTC SiteMay 22, 2008
Merrill Lynch & Co. is in renewed talks to move its headquarters to a planned skyscraper at the World Trade Center site, according to people familiar with the matter.
The move would be a major boost to the massive development at the site of the Sept. 11, 2001, attacks. While work is under way on a wide range of projects, few private-sector tenants have expressed serious interest in leasing space at the site.
Merrill’s lease at its current downtown Manhattan home will expire in 2013. Senior executives at Merrill have discussed the trade-center possibility and have given the green light to its corporate real-estate team to explore the move. Selena Morris, a Merrill spokeswoman, declined to comment.
The talks with Merrill are considered preliminary, and a deal could still be months away or could fall apart. The securities firm had seriously considered moving its headquarters last year, and has had on-and-off-again discussions about several locations, including the World Trade Center.
The board of the Port Authority of New York and New Jersey, the bistate agency that owns the site, is expected to discuss the matter Thursday and could vote to authorize a pause in the construction process to allow Merrill’s design needs to be accommodated. A Port Authority representative declined to comment.
The building Merrill is considering is one of three being developed by Larry Silverstein, the New York developer who purchased the Twin Towers six weeks before the terrorist attacks. The Port Authority board will decide whether to give him a six-month extension on his deadline to complete the tower, currently February 2013. If Mr. Silverstein doesn’t finish by the deadline, he must forfeit his interest in all three buildings.
The extension would give Mr. Silverstein time to redesign the tower’s foundation to make possible large trading floors and custom mechanical systems. Construction crews began preparing the foundation for the tower in February.
Merrill is likely to seek significant government tax breaks. Merrill’s rivals Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. have negotiated incentive packages to build towers in lower Manhattan. Mr. Silverstein, a developer with a reputation as a tough negotiator, declined to comment.
The building Merrill is considering, known as Tower 3, is slated to rise 71 stories and include 2.5 million square feet of office space, enough to accommodate roughly 10,000 workers. The current design is by architect Richard Rogers and envisions a glass-and-steel tower decorated with exposed beams and columns. The building could get larger and Merrill may choose to change the tower’s look.
The trade-center project has been dogged by logistical challenges, cost overruns and questions about its appeal to businesses. The Freedom Tower, slated to be the first office building completed, has signed leases only with the state and federal governments.
Merrill last year came close to inking a deal with Vornado Realty Trust to move to the site of the Hotel Pennsylvania in midtown Manhattan. But the firm put its headquarters planning on the back burner after it was rocked by losses from investments in subprime-mortgage securities and the departure of its chief executive, Stanley O’Neal.
Discussion of building a new headquarters so soon after Merrill has taken big losses could rankle investors. But people familiar with the matter say Merrill could end up with a more efficient home at a price that is comparable to staying put in its current home in Brookfield Properties Corp.’s World Financial Center, across the street from Ground Zero. Merrill was close to signing a five-year lease extension with Brookfield in January, but the two sides have yet to finalize a deal.