By Daniel Geiger
Bank of America is close renewing its office lease at 114 West 47th Street in what will be one of the biggest leasing transactions this year.
The bank, which inherited the space when it acquired the U.S. Trust Corporation in 2007, occupies over 500,000 s/f of the building’s nearly 660,000 s/f.
The office property, known as the U.S. Trust Building after its former tenant – and for whom the Durst Organization developed the building for in the late 1980s – has been an uncertain piece in Bank of America’s evolving real estate puzzle.
The property is close to Bank of America’s new Manhattan headquarters, One Bryant Park, which sits on the corner of 42nd Street and Sixth Avenue. The convenience of 114 West 47th to Bank of America’s main New York office allows the kind of campus-like proximity that many large corporate tenants seek between their Manhattan locations. But some real estate brokers with knowledge of the bank’s real estate decisions said even in recent months that it was not clear whether the company would renew its lease there, which is set to expire in 2013.
Adding to the uncertainty is how much space the bank plans to keep at the World Financial Center, the downtown office complex that serves as the headquarters of Merrill Lynch, the large investment bank that Bank of America purchased when it was near insolvency during the financial crisis. Bank of America’s decision on Merrill Lynch’s presence in Lower Manhattan appears to be one of the chief drivers of its real estate needs in midtown, because there is speculation that it would relocate Merrill personnel following any reduction in its downtown footprint.
When it was announced that the media and publishing company Condé Nast, would relocate to One World Trade Center, rumors began to swirl that Condé’s current headquarters, 4 Times Square, which sits adjacent to One Bryant Park, could give Bank of America an opportunity to consolidate. The bank could potentially move Merrill Lynch’s downtown operations as well as the facilities from 114 West 47th Street into a state of the art office tower. Adding to the chance of such a dramatic real estate shuffling was the Durst Organization’s stake in all four towers involved in the move, 4 Times Square, One Bryant Park, 114 West 47th Street, and One World Trade Center, a factor that some experts said could help coordinate the move.
Instead, knowledgeable sources said that Merrill Lynch ended up playing little role in Bank of America’s midtown real estate plans, and that the renewal deal at 114 West 47th Street is being done simply to keep space for the bank’s existing facilities, which include wealth management, back office functions and other operations.
Bank of America has still not publicly stated what it will do with the space at the World Financial Center, which also expires in 2013, but real estate experts familiar with the bank say that it will likely reduce its offices substantially.
One source said that Merrill was aiming to cut its presence at Four World Financial Center, a two million s/f office building that it fully leases and owns in partnership with World Financial Center’s landlord Brookfield Properties, by about half. At Two World Financial Center, the other property in the complex where Merrill has substantial space, the firm would only keep floors at the top of the 2.8 million s/f tower, greatly reducing the roughly one million s/f it has there.
It appears that many Merrill operations that were to be brought to midtown already have been relocated and absorbed into Bank of America’s facilities there, and that much of the space the bank is planning to dispose of downtown is already vacant. Bank of America also pruned portions of Merrill’s operations because they were redundant after the merger or no longer profitable.
A Bank of America spokesman T.J. Crawford would only say that “no lease has been signed” at 114 West 47th Street and wouldn’t discuss whether the bank was in negotiations for the space. People familiar with the deal say that Bank of America was in talks for an over 10-year extension on the space. Rents in the deal were not disclosed by press time.
A leasing team from the real estate services company Cushman & Wakefield led by top executives John Cushman, Tara Stacom and Dale Schlather is representing Bank of America in its deal at 114 West 47th Street. None could be reached for comment for this article. Calls to a Durst leasing executive also were not returned.