American International Group Inc. (AIG), the insurer rescued by U.S. taxpayers, is weighing a move from its headquarters at 180 Maiden Lane in lower Manhattan, said two people with knowledge of the company’s planning.
The approximately 2,000 employees there may be transferred to other locations as part of a cost-saving consolidation, said one of the people, who asked not to be identified because the deliberations are private. An AIG-owned property at 175 Water St., within walking distance from Maiden Lane, is among the buildings that may absorb the workers, the person said.
AIG’s departure would add to vacancies in lower Manhattan, including space in the World Trade Center and World Financial Center. The Maiden Lane property is co-owned by SL Green Realty Corp. (SLG) and Moinian Group, which have listed about 850,000 square feet (79,000 square meters) in the building as available in May 2014, according to CoStar Group Inc. (CSGP)
“The downtown market is facing an absolute glut of space,” said Aaron Jodka, manager of U.S. market research at CoStar, a Washington-based real estate data service. “Tenants are going to have their choice of space, and it’s going to be very challenging in that environment for landlords to be aggressively pushing rents.”
AIG has less need for space as Chief Executive Officer Robert Benmosche shrinks the company and sells units to pay back a U.S. bailout that swelled to $182.3 billion. The New York- based insurer had 57,000 employees worldwide as of Dec. 31, down from 116,000 three years earlier.
“No final decisions have been made regarding the 180 Maiden Lane lease,” Jim Ankner, a spokesman for AIG, said in a phone interview today. “We are committed to preserving AIG’s presence in New York City.”
Lower Manhattan’s class A office vacancy rate may climb to 17.4 percent by the end of next year from 8.8 percent at the end of June, according to data from Cassidy Turley, a commercial property brokerage with offices in New York.
One World Trade Center, which the Durst Organization is leasing on behalf of owner Port Authority of New York and New Jersey, has about 45 percent of its 3 million square feet still unrented, according to its developers. Larry Silverstein’s 4 World Trade Center has 1.2 million square feet available, and Brookfield Office Properties’s World Financial Center has about 3 million square feet up for lease after former Merrill Lynch & Co. leases expire next year, according to CoStar.
AIG leased more than 800,000 square feet at 180 Maiden Lane as of Dec. 31, SL Green, New York’s largest office landlord, said in its annual report. When SL Green bought its 49.9 percent stake in 180 Maiden last year, it underwrote the deal as if AIG wasn’t going to stay, Andrew Mathias, president of New York- based SL Green, said yesterday on a conference call discussing second-quarter results.
“We’re actively exploring the possibilities of both a redevelopment of the asset and bringing it to the market for new tenants,” Mathias said.
“If there’s any management team out there that will lease up their space, I have more confidence in SL Green,” said Mitchell Germain, an analyst at JMP Securities LLC in New York. “They recognize the market on a positive and on a negative. They see the deficiencies in the market, and they clearly will make sure their product is priced accordingly.”
The Maiden Lane property became AIG’s principal office after the company struck a deal in 2009 to sell its previous headquarters at 70 Pine St. to Kumho Investment Bank, a South Korean firm, and Youngwoo & Associates, a Manhattan-based developer. AIG also sold a Tokyo office property to Nippon Life Insurance Co. for about $1.2 billion.
Eric Gerard, a spokesman for Moinian, referred questions regarding the AIG lease to SL Green. Heidi Gillette, an SL Green spokeswoman, didn’t respond to a voice mail.
AIG has said it’s working to cut general and administrative expenses by about $1 billion from 2010 levels by the end of 2015. That’s part of aspirational goals AIG laid out in a 2011 filing, which include increasing its return on equity to at least 10 percent.