Bloomberg News

Morgan Stanley, AIG Face Weeks Without Lower NYC Offices

November 01, 2012

Morgan Stanley to AIG Face Weeks Without Lower NYC Offices

Smoke rises during the aftermath of a house fire at 44 Binney Lane in Old Greenwich, Connecticut, U.S., on Tuesday, Oct. 30, 2012. MANDATORY CREDIT Photographer: Bob Luckey/Greenwich Time and ©2012 Hearst Conn. Media Group http://www.greenwichtime.com/news/article/Superheroes-Firefighters-praised-for-halting-3994018.php MANDATORY CREDIT

In any kind of “normal” flood, water would never reach 80 Pine St., a 39-story tower two blocks inland from the lower Manhattan waterfront, landlord William Rudin said.

Last night, his Rudin Management Co. was pumping out the basement, and he was grateful his building manager and engineer weren’t seriously hurt when water poured in as they were shutting down steam lines and checking equipment.

“They were in a very precarious position on Monday night,” Rudin said in a telephone interview. “They’re lucky they’re alive. Quick thinking by a couple of their associates saved their lives. So we’re very thankful.”

Now owners such as Rudin are dealing with the aftermath of the Atlantic storm Sandy, which triggered flooding on Oct. 29 that was anything but normal in lower Manhattan and may have put some buildings that are home to Wall Street firms out of commission for weeks. Landlords are draining basements and determining what it will take to get vital systems for electricity and steam back in service. Among the companies facing possible delays returning to their offices are Morgan Stanley and American International Group Inc. (AIG:US)

The tower at 80 Pine is one of two of Rudin’s buildings that flooded, he said. The other is 110 Wall St. Tenants at 80 Pine include law firm Cahill Gordon & Reindel LLP, and Tullett Prebon Americas Corp., a unit of the London-based inter-broker dealer, according to data from CoStar Group Inc. (CSGP:US), a Washington- based firm that tracks commercial-property leasing.

Water Street

Tenants at 110 Wall include First Investors Management Co., which offers mutual funds and other financial products, and M.R. Beal & Co., an investment bank.

“Depending on the systems affected, we’re talking weeks, not days,” said Jim Rosenbluth, managing director for crisis management at Cushman & Wakefield Inc., which manages about 15 million square feet (1.4 million square meters) of properties in downtown Manhattan. “My assessment is those buildings can’t be used, because you have to have all the basic building services up and running to make the building habitable.”

Buildings along or near Water Street, which runs from Battery Park on the lower end of the island past Wall Street to Fulton Street, bore the brunt of the record 14-foot (4.3-meter) surge that inundated lower Manhattan in Monday’s storm, Rosenbluth said. Many large financial firms have offices in that area.

AIG Headquarters

The building at 180 Maiden Lane, which houses AIG’s headquarters, suffered “heavy flooding,” co-landlord SL Green Realty Corp. (SLG:US) said yesterday in a statement. Engineers and other workers are removing water and seeking to restore operating systems as soon as they can, the company said.

That 1.1 million-square-foot building is just across the FDR Drive from the East River, a block east of 80 Pine.

Rick Matthews, a spokesman for New York-based SL Green, wouldn’t comment beyond the statement. Jim Ankner, an AIG spokesman, said the company had initiated “business continuity plans” so it can serve customers.

The water must be pumped out before the damage to building equipment can be assessed, Rosenbluth said, speaking in general. Cushman doesn’t service 180 Maiden.

“Once that is done, and a visual assessment can be made, obviously everything has to be washed down to get the salt off, and then those spaces have to be dried out,” he said. “And then a comprehensive assessment of the electric and mechanical systems in those buildings has to be done.”

Department Determination

The city Department of Buildings will determine when the buildings can reopen, Rosenbluth said. Calls and e-mails to Tony Sclafani, a department spokesman, weren’t returned.

The department will be inspecting all structures throughout the city that lie in “Zone A,” its designation for the areas most vulnerable to flood, Mayor Michael Bloomberg said at a press conference yesterday. Safe buildings will get a green tag, those that are partially safe will be assigned a yellow tag and structures not ready for occupancy will get a red tag. Large building owners can self-certify if city engineers approve, the mayor said.

The mayor is founder and majority owner of Bloomberg LP, the parent of Bloomberg News.

Morgan Stanley

Workers at Morgan Stanley’s offices at 1 New York Plaza are waiting to hear when they can return, a person with knowledge of the situation said. The company may face an extended absence there because salt water got into the basement where operating systems are located, said the person, who asked not to be identified because the information is private.

Employees from 1 New York Plaza are working at other offices, including Morgan Stanley (MS:US)’s headquarters in Times Square, which is fully operational, or are using computers remotely, said Matt Burkhard, a spokesman for the company.

Brookfield Office Properties (BPO:US), which owns the 2.6 million- square-foot skyscraper near the foot of Manhattan, said in a statement that flooding took place in the building’s sub-levels.

Water removal “is substantially under way, and Brookfield is taking all necessary steps to bring 1 New York Plaza online as quickly as possible,” the company said in a statement e- mailed by Andrew Willis, a spokesman for Brookfield’s parent company, Toronto-based Brookfield Asset Management Inc. (BAM/A)

Brookfield is lower Manhattan’s largest office landlord.

‘Collateral Damage’

The 8 million-square-foot World Financial Center, the company’s largest New York property, suffered only “limited collateral damage,” according to the statement. Power has already been restored at the four-building complex, which sits by the Hudson River, the company said.

At the World Trade Center site, water got into the lowest sub-basement of 4 World Trade Center, said a person with knowledge of that property, which is under construction by Silverstein Properties Inc. The building’s mechanical equipment wasn’t damaged because they are on a level above the sub- basement, which is 80 feet below the street, said the person, who declined to be identified because the information is private.

Removal of the water is “well under way,” Silverstein Properties said in a statement e-mailed by spokesman Bud Perrone. Four World Trade remains on track for completion next year, the company said.

‘Rethink’ Buildings

Repairing damaged buildings in lower Manhattan won’t simply be a matter of putting everything back where it was, Rudin said today in an interview on Bloomberg Television’s “In the Loop” with Betty Liu.

“We’re going to have to rethink how these buildings get rebuilt,” he said. “Put the power up higher, have more robust emergency generators. I think the governor and the mayor have already talked about that, and I think that’s an important step.”

Today’s lifting of a moratorium on exterior construction, which the mayor imposed on Friday because of high winds, should expedite the recovery, Rudin said.

In a city where 6,300 people remained in shelters as of yesterday and subway service to lower Manhattan remains suspended, getting downtown’s towers back in service is a priority competing with others, said Thomas Scarangello, chief executive officer of Thornton Tomasetti Inc., an engineering firm which is helping landlords and insurers assess the damage.

“Everyone understands the enormity and the basic challenges,” he said. “Till the water’s gone and you see the issues that have to be addressed, it’s hard to put a timeline on any of it.”

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 at kwetzel@bloomberg.net


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Companies Mentioned

  • AIG
    (American International Group Inc)
    • $54.02 USD
    • 1.14
    • 2.11%
  • CSGP
    (CoStar Group Inc)
    • $176.25 USD
    • 5.09
    • 2.89%
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