Bank of New York Mellon Corp. is poised to choose between a lower Manhattan skyscraper and a smaller office building in New Jersey for at least 850 employees who would relocate with a sale of the company’s Wall Street headquarters, a person with knowledge of the discussions said.
One of the bank’s top candidates is 225 Liberty St., a 2.7 million-square-foot (251,000-square-meter) tower at New York’s Brookfield Place complex that was once mostly leased to Merrill Lynch & Co., said the person, who asked not to be named because the talks are private. The other front-runner is a 410,000-square-foot waterfront building at 70 Hudson St. in Jersey City, the person said. Alternatives haven’t been ruled out.
The company’s predecessor, Bank of New York, has been in lower Manhattan since it was founded by Alexander Hamilton in 1784. The bank late last year hired brokers to help it sell its Wall Street headquarters and lease about 400,000 square feet of office space. The governments of New York and New Jersey are putting together packages of benefits designed to sway BNY Mellon’s decision for a move, the person said.
“They’re playing the New Jersey thing off of New York right now, trying to get some reasonable level of incentives,” said Peter Hennessy, president of the New York tri-state region for brokerage Cassidy Turley, which isn’t involved in the lease discussions. “It’s important for New York to retain the stature of downtown as one of the key financial markets in the world.”
BNY Mellon is also closing in on selecting a buyer for 1 Wall St., a 52-story limestone tower near Broadway that may fetch one of the highest per-square-foot prices for a large lower Manhattan office building, the person said. Bids for the 1 million-square-foot skyscraper may come in as high as $600 million, or about $600 a square foot, a price largely driven by the potential for the floors above its base to be converted to residential condominiums, according to the person.
The company is “exploring the sale of 1 Wall St. and examining potential properties to lease in New York and New Jersey,” said Kevin Heine, a BNY Mellon spokesman. “That process continues and no decisions have been made.”
He said the bank expects to settle on its plans by the end of the second quarter or the beginning of the third.
Melissa Coley, a spokeswoman for Brookfield Office Properties Inc., owner of the 8 million-square-foot Brookfield Place, declined to comment on any talks with potential tenants. A little less than 2 million square feet of former Merrill Lynch space in the complex remains unleased, she said in an e-mail.
Brookfield is in advanced discussions on leases totaling 1.1 million square feet at the complex, Chairman Ric Clark said on a May 1 conference call. He said the company is “cautiously optimistic” those agreements will be signed.
“We could end the year at Brookfield Place with considerably less of this space available,” Clark said. “But it is way too early to claim victory or count your chickens.”
The 44-story Liberty Street tower, located on the Hudson riverfront, emerged as a favorite after BNY Mellon also considered space in new skyscrapers at the World Trade Center site, according to the person with knowledge of the discussions.
The bank plans to split the 1,700 employees who work at 1 Wall St. between the new building and its offices at 101 Barclay St. nearby, with most going to the new site, the person said.
Moving to Jersey City, one stop from Manhattan on the PATH train, would be a less costly option. Class A office rents on New Jersey’s Hudson waterfront averaged $38.94 a square foot at the end of March, according to data from Cushman & Wakefield Inc. In the World Trade Center submarket, which includes Brookfield Place, the average was $62.15 a square foot.
The 12-story building at 70 Hudson St. was completed in 2000 by New Jersey-based developer Hartz Mountain Industries Inc. It’s just north of the Goldman Sachs Group Inc. tower at 30 Hudson St., which is New Jersey’s tallest skyscraper.
Lehman Brothers Holdings Inc. rented all of 70 Hudson St. after its offices at Brookfield Place, then known as the World Financial Center, were damaged in the Sept. 11, 2001, terrorist attack. Barclays Plc took over the lease after Lehman filed for bankruptcy in 2008, and its agreement expires in January 2016, according to information compiled by Bloomberg.
Barclays intends to vacate the building, the person with knowledge of the situation said. Brandon Ashcraft, a Barclays spokesman, declined to comment on the bank’s plans.
The building is owned by Princeton, New Jersey-based Chambers Street Properties. Andrew Neilly, a spokesman for the landlord with Gallen Neilly & Associates, declined to comment. Erin Gold, a spokeswoman for the New Jersey Economic Development Agency, and Jason Conwall, spokesman for the Empire State Development Corp., declined to comment on any incentives.
The highest per-square-foot sale price for a lower Manhattan office building of 250,000 square feet or larger was $732, when Paramount Group Inc. bought Deutsche Bank AG’s headquarters at 60 Wall St. in 2007, according to data from research firm Real Capital Analytics Inc. The post-recession peak of $577 a square foot was reached in December when Verizon Communications Inc. sold part of its headquarters building at 140 West St. to Magnum Real Estate Group, which is converting the space to luxury condos.