Morgan Stanley May Lease Old Goldman Sachs Building

Morgan Stanley may be the next tenant at the former home of rival Goldman Sachs Group Inc.

Morgan Stanley is searching for about 1 million square feet (93,000 square meters) of offices in lower Manhattan and is considering 1 New York Plaza, where it already rents, and Goldman Sachs’s former headquarters at 85 Broad St., three people with knowledge of the discussions said. The bank also is looking at other properties as it seeks to consolidate some of its downtown operations, said one of the people, who asked not to be named because the talks are private.

Goldman Sachs, the most profitable firm in Wall Street history, moved its headquarters to a new 43-story skyscraper at 200 West St. this year after almost three decades at 85 Broad St., a 1.2 million square-foot tower it built for itself in the early 1980s. Bank of America Corp. and Bank of New York Mellon Corp. have also considered leasing at 85 Broad, one person said.

“How can you not?” said Robert Sammons, director of research in the New York office of Cassidy Turley, a brokerage that isn’t involved in the tower’s leasing. “It’s got all the bells and whistles that they would need. All that extra power they would need is already there, and ready to rock and roll.”

Morgan Stanley, based in Midtown, is seeking space in lower Manhattan as vacancies in the area climb, in part because of moves by Goldman Sachs and insurer American International Group Inc. The downtown office vacancy rate jumped to a six-year high of 12.1 percent in the third quarter from 9.9 percent a year earlier, according to Cushman & Wakefield Inc. Another 4.4 million square feet becomes available at the World Trade Center in 2013, and 4.6 million square feet of Bank of America leases expire that year at the World Financial Center.

Leasing Terms

Morgan Stanley has exchanged potential leasing terms with representatives of MetLife Inc., which owns 85 Broad St., and has done test layouts to examine how its operations would fit into the building, two people briefed on the negotiations said.

Mark Lake, a Morgan Stanley spokesman, declined to comment, as did James Kuhn, president of Newmark Knight Frank, the broker representing the bank. T.J. Crawford, a spokesman for Bank of America, and Jeep Bryant, a representative for BNY Mellon, also declined to comment.

Peter Riguardi, MetLife’s broker for 85 Broad, and president of New York operations for Jones Lang LaSalle Inc., didn’t return phone calls.

“We have had strong interest in the property and we continue to have strong interest, but we have nothing to report at this time,” said John Calagna, a MetLife spokesman.

1 New York

Morgan Stanley, the sixth-largest U.S. bank by assets, is a long way from deciding where to house its downtown operations, the people said. The company has also looked at potential layouts at 1 New York Plaza, where it rents about 750,000 square feet, two people said.

Goldman is leaving behind about 550,000 square feet at 1 New York as it moves to its new headquarters, according to data from CoStar Group Inc., a Bethesda, Maryland-based real estate information service.

Brookfield Office Properties is the majority owner of 1 New York Plaza and the World Financial Center. Melissa Coley, a spokeswoman for the New York-based company, declined to comment.

Morgan Stanley’s new downtown space wouldn’t replace its headquarters at 1585 Broadway. Morgan Stanley Smith Barney, the brokerage joint venture in which Morgan Stanley owns a controlling stake, is based in Purchase, New York.

Falling Rents

Lower Manhattan office rents declined to $39.08 a square foot from $42.01 in the third quarter of 2009, said Cushman, the biggest closely held commercial property broker. Downtown is offering “some really good values,” said Joseph Harbert, the brokerage’s chief operating officer for its New York region.

Manhattan brokers are anticipating “several large financial sector leasing relocations in the fourth quarter,” Sheldon Cohen, head of downtown operations for Cushman rival CB Richard Ellis Group Inc., said last week.

Manhattan’s overall office vacancy rate was 10.9 percent in the third quarter, compared with 11.1 percent a year earlier and 10.8 percent in the previous three months, according to Cushman. Rents fell for the eighth straight quarter to $53.80 a square foot from $57.08 a year earlier.

Morgan Stanley had been the largest tenant in the World Trade Center’s twin towers when they were destroyed in 2001. Following the attack, it bought the former Texaco Inc. headquarters in Purchase, and moved about 1,500 employees there. It returned to lower Manhattan in 2005, leasing five and a half floors at 1 New York Plaza.

Morgan Stanley rose 38 cents, or 1.5 percent, to $25.40 as of 4:15 p.m. in New York Stock Exchange composite trading. The stock has lost 14 percent this year.

To contact the reporter on this story: David M. Levitt in New York at dlevitt@bloomberg.net; Michael J. Moore in New York at mmoore55@bloomberg.net.

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net; David Scheer at dscheer@bloomberg.net

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Morgan Stanley Said to Consider Goldman's Old Headquarters

JB Reed/Bloomberg

The former headquarters of Goldman Sachs Group at 85 Broad Street in New York.

The former headquarters of Goldman Sachs Group at 85 Broad Street in New York. Photographer: JB Reed/Bloomberg