Bloomberg News

Citigroup Said to Explore Office Lease at World Trade Center

June 14, 2011

(Updates with comment from broker in fourth paragraph.)

June 14 (Bloomberg) -- Citigroup Inc. is considering leasing offices at the World Trade Center site in lower Manhattan, two people with knowledge of the discussions said.

The third-biggest U.S. lender is exploring a variety of options and hasn’t decided which building it is interested in, said one of the people, who asked not to be identified because the talks are private. Four towers are in progress, including 1 World Trade Center, slated to be the western hemisphere’s tallest building upon its completion in 2013.

A Citigroup lease would be another victory for the trade center redevelopment, stalled for years because of indecision on its design, infighting among stakeholders and a lack of financing and tenant interest after the financial meltdown. Last month, Conde Nast Publications Inc. agreed to rent about 1 million square feet (93,000 square meters) at 1 World Trade, and UBS AG may move staff to 3 World Trade Center from Stamford, Connecticut, people familiar with the matter said.

“You can’t compare a brand-new building for efficiencies, systems, amenities, the way you can utilize space, versus an older one,” said Alan Desino, executive managing director at the New York offices of Colliers International, a commercial- property brokerage. “Pricing downtown is still very attractive, you can lock in 20-plus years in a brand-new building. That’s why you’re seeing a lot of the seemingly well-entrenched really wondering if they’re in the best situation.”

Early Stages

Citigroup, which has headquarters at 399 Park Ave. in midtown Manhattan, is in the early stages of studying its options, the people with knowledge of the talks said.

The bank also occupies offices at 601 Lexington Ave., a 59- story Midtown skyscraper known until 2009 as Citigroup Center. Both buildings are owned by Boston Properties Inc., the biggest U.S. office real estate investment trust. Arista Joyner, a Boston Properties spokeswoman, declined to comment.

“Although we are always in touch with the real estate community about space that is coming on the market over the next few years, we have no plans to change our footprint in New York City,” Shannon Bell, a Citigroup spokeswoman, said in a telephone interview.

Queens, Tribeca

Citigroup’s offices tend to be close to stations along New York’s E subway line. Besides the two Midtown buildings, they include 1 Court Square, the city’s tallest tower outside Manhattan, in the Long Island City section of Queens, and 388 and 390 Greenwich St. in Manhattan’s Tribeca neighborhood, formerly headquarters of the Travelers Group insurance unit and now a trading complex.

The World Trade Center site is the southern terminus of the E line, which runs to Jamaica Center in central Queens.

SL Green Realty Corp., Manhattan’s biggest office landlord, owns the Greenwich Street buildings as well as 1 Court Square. Rick Matthews, an SL Green spokesman, declined to comment.

The Durst Organization, which is responsible for leasing 1 World Trade, is in talks with companies whose space needs “are in excess of what we have available,” said Tara Stacom, a broker with Cushman & Wakefield Inc. who represents the developer. She declined to comment on whether they’re having discussions with Citigroup.

One World Trade

“One World Trade Center is a building of great interest to a lot of people, as it was, quite frankly, even before the deal with Conde Nast closed,” she said. “The entire site will surprise a lot of people come the end of this year in terms of the announcements, the levels and the number of deals that will be announced.”

About 1.2 million of the tower’s 3 million square feet are leased, Stacom said, including an earlier deal with Beijing Vantone Real Estate Co., a Chinese property firm. Tentative commitments from federal and New York State governments to take another 1 million square feet are flexible enough to allow additional private leasing, she said.

In November, Durst chairman Douglas Durst said the state may not take the space, given its budget problems.

Durst is the equity partner of the Port Authority of New York and New Jersey, which owns the 16-acre site and is developing 1 World Trade. Silverstein Properties Inc. is building two towers, 3 and 4 World Trade Center, and has started foundation work on a third, 2 World Trade, under a lease from the Port Authority.

Dara McQuillan, a Silverstein spokesman, declined to comment.

--With assistance from Bradley Keoun in New York. Editors: Christine Maurus, Kara Wetzel

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

To contact the editor responsible for this story: Kara Wetzel in New York at kwetzel@bloomberg.net


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