JPMorgan to Build Tower at World Trade Center SiteJun 14, 2007
JPMorgan Chase & Co. agreed to build a skyscraper near Ground Zero for its investment-banking headquarters, becoming the second Wall Street firm to commit to moving into the area devastated by the terror attacks of Sept. 11.
The third-largest U.S. bank will occupy a tower with about 40 stories, 1.3 million square feet and six trading floors, New York Governor Eliot Spitzer and JPMorgan Chief Executive Officer Jamie Dimon said today at a news conference with the Port Authority of New York and New Jersey. The bank will invest about $2 billion in the project, which may be completed by 2012.
JPMorgan will become the first private-sector company to take space in the Ground Zero reconstruction zone. The deal will bolster the recovery of New York’s financial district as it rebounds from Sept. 11 and may help lure more companies to the site where the twin towers once stood.
“There couldn’t be a more affirmative statement for New York as a financial capital,” Spitzer said.
JPMorgan will pay $290 million for the site and have a 92- year lease that begins July 2008. The bank will receive government economic development incentives as part of the deal. The full value wasn’t disclosed. It will get up to $20 million when it reaches full employment in lower Manhattan, Spitzer said.
The incentives were “off the shelf” and most are available to companies developing downtown, Spitzer said. The New York Times reported JPMorgan got city and state subsidies worth about $100 million, citing an official familiar with the deal.
Former Deutsche Site
The JPMorgan building will be constructed at Cedar and Greenwich Streets at the site of the former Deutsche Bank AG building, which was damaged on Sept. 11 and is being demolished.
“We’re proud of going back home,” said Dimon, who pointed out the bank traces its roots to lower Manhattan back more than 200 years. “We’re developing a site that will be absolutely world-class for JPMorgan.”
JPMorgan will move its investment banking operations to the site, bringing 7,000 employees to lower Manhattan from midtown. The bank said it will retain its corporate headquarters at 270 Park Ave. and fully renovate it over the next several years.
The move comes as Goldman Sachs Group Inc. is building its headquarters adjacent to the former trade center site, which is controlled by the Port Authority. J.P. Morgan & Co. moved to midtown from Wall Street in 2001 when the firm was acquired by Chase Manhattan Corp. Dimon, 51, became JPMorgan’s CEO earlier this year.
The plan calls for six trading floors, each with up to 60,000 square feet, the company said. Community groups have criticized the floors because they will extend beyond the site’s 32,000 square-foot footprint and overhang a new park and a rebuilt St. Nicholas Greek Orthodox Church.
The skyscraper will be designed by A. Eugene Kohn of Kohn Pedersen Fox, a New York-based architecture firm that is also building the Shanghai World Financial Center, people familiar with the matter said.
Securities firms are seeking offices with modern trading floors as a growing portion of their revenue comes from buying and selling stocks, bonds, currencies and commodities.
Goldman Sachs, the world’s most profitable securities firm, is building a $2.5 billion headquarters with about 500,000 square feet for trading across West Street. Goldman’s 43-story tower is scheduled to open in 2009.
Goldman made 60 percent of its revenue, or $22.7 billion, from trading in fiscal 2006. JPMorgan took in $6.3 billion, nearly a third of its $19.7 billion in first-quarter revenue, from investment banking and trading.
The $2.5 billion Goldman building is being funded with $1.6 billion in tax-exempt Liberty Bonds, intended to entice big employers to stay in downtown Manhattan after Sept. 11. The JPMorgan project won’t receive such bonds.
The Liberty Bonds could save Goldman at least $100 million over the life of the bonds, said Doug Turetsky of the city’s Independent Budget Office. Goldman’s deal also includes up to $115 million of New York City and state tax breaks.
Demand for office space in lower Manhattan is surging as the area recovers from the attacks. The vacancy rate fell 36 percent to 7.6 percent at the end of the first quarter from a year ago, according to Grubb & Ellis Co., a brokerage firm.
“Downtown has really come back and come back strong,” said Mary Ann Tighe, chief executive of commercial broker CB Richard Ellis Group Inc.’s New York office. “If any validation was needed, this certainly validates the site all over again.”
City, state and federal agencies, including U.S. Customs and Border Protection, have agreed to lease space in Freedom Tower, the 1,776-foot-tall skyscraper to be built at the site by 2012, and at 4 World Trade Center, a smaller tower to be finished in 2011.
Developer Larry Silverstein, who holds the lease on the World Trade Center site and is building four other office towers there, said the JPMorgan deal will help revitalize downtown Manhattan.
“JPMorgan Chase is a tremendous addition to the new downtown,” Silverstein said today in a statement. “Like the Goldman Sachs headquarters and the speedy lease-up of 7 World Trade Center, it proves again that downtown has re-emerged as the financial capital of the world.”
Community Board 1, a group representing downtown residents, opposes the plan to cantilever the trading floors over the park because it would cast a shadow on the area.
The group “has been left in the dark” in the planning process, said Catherine McVay Hughes, chairwoman of the board’s World Trade Center redevelopment committee.
“We’d like to be involved and have a truthful analysis of any shadows that would be cast on Liberty Park or the World Trade Center memorial,” she said. “We don’t need another concrete plaza down here that’s covered in shadow.”