Bank of America May Deliver Another Blow To Lower Manhattan Real Estate


Merrill Lynch occupies a huge portion of lower Manhattan’s World Financial centre, an office complex that overlooks the “ground zero” site where the World Trade centre’s twin towers once stood. This summer it is expected to make a decision about whether to renew the lease, which is set to expire in 2013. Now real estate insiders are casting doubt on that prospect.

The idea that Merrill Lynch would abandon lower Manhattan for midtown might come as a shock to many. Merrill quickly moved back into the space in the World Financial centre in March of 2002, just six months after the attack on the World Trade centre. It was seen by many as a sign of lower Manhattan’s rebirth in the wake of the tragedy. Words like “heroic” and “homecoming” were frequently used.

No doubt many will look at this as another blow to the culture of Merrill. This morning the Wall Street Journal reported on Merrill’s “thinning herd.” One top New York broker told the Journal he was afraid Merrill would be “a different place” under Bank of America’s ownership. Now it seems that might literally be true.

Just last year, Merrill was in talks to build a 70 story building on the “ground zero” property. That deal fell apart. Next came reports that Merrill would move to a space across from Penn Station. As late as January, however, the Wall Street Journal reported that deal had fallen apart and Merrill would be remaining in the World Financial centre.

Today Bloomberg is reporting that a major portion of Merrill’s operation may be moved to midtown as part of the integration with Bank of America.

“It is our understanding that Merrill will be moving much of its banking, sales and trading from downtown to Midtown and filling up much of the space B of A either has or would have had available,”  SL Green Realty Corp. Chief Executive Officer Marc Holliday is quoted as saying at Citigroup’s Global Property CEO Conference in Naples, Florida. Bank of America has a new headquarters tower at Sixth Avenue and 42nd Street, right next to the Conde Nast building occupied by the magazine publisher and law firm Skadden Arps.

“Merrill’s exit from lower Manhattan would put more space on the market as landlords face the worst commercial property slump in more than a decade,” Bloomberg’s David Levitt notes. “JPMorgan Chase & Co., Citigroup Inc., bankrupt Lehman Brothers Holdings Inc. and industry rivals have already vacated 4.6 million feet, according to CB Richard Ellis Group Inc.”

Bank of America’s spokesman said no decision had been made on Merrill yet.

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