Brookfield Office Properties Inc. (BPO) is in talks with two companies for about half of the space Bank of America Corp. (BAC) will leave behind at New York’s World Financial Center, the landlord’s chief executive officer said.
Ric Clark, speaking on New York-based Brookfield’s fourth-quarter earnings conference call, didn’t identify the potential tenants. About 3.1 million square feet (288,000 square meters) of offices in the lower Manhattan complex become available after leases originally signed by Merrill Lynch & Co. run out in 2013.
“We certainly hope that we get half of it done this year, and half of it done next year, before the expiries come,” Clark said. “I don’t think the market is quite as slow as the press has been reporting it, at least not from the level of our discussions.”
Brookfield’s earnings “could be hit relatively hard” if office demand wanes in lower Manhattan, Ross Smotrich, an analyst with Barclays Capital Inc. in New York, wrote in a Jan. 26 research note. Office availability rose to 11.6 percent in the fourth quarter, and “spikes” of unleased space are probable as Bank of America vacates and two World Trade Center buildings are completed, the brokerage firm Studley Inc. said in a report last last month.
Brookfield may benefit as financial firms, which once dominated lower Manhattan, seek to consolidate from multiple locations into large blocks of space, which the office owner can offer, Clark told analysts on the call. At the same time, technology and media companies are adding staff in New York, and the financial center is “well-suited” to accommodate them, he said.
New retail leases at the complex may be announced by May, Clark said. Brookfield is spending $250 million to upgrade the financial center’s retail portions, which surround its Winter Garden atrium near the Hudson River.
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