Verizon Communications Inc. (VZ:US), the second-largest U.S. phone company, will sell or lease out about half the space in its Manhattan headquarters, part of a move to cut costs and raise cash in a rebounding real estate market.
The company is inviting investors to assess the property this week and submit plans for potential use, Verizon said today in a statement. It expects to keep the first 10 floors of the 31-story structure, a 1920s-era building whose lobby and exterior are designated as New York City landmarks.
By offering the space, located at 140 West St., Verizon aims to capitalize on a renaissance of the area following the Sept. 11 attacks more than a decade ago. The building is across the street from One World Trade Center, now the tallest tower in the U.S., which will open next year. The real estate could be used as retail, restaurant, hotel or residential space for the burgeoning neighborhood, Verizon said.
“Lower Manhattan -- especially the World Trade Center neighborhood -- is destined to be an important tourist and commercial center for the world, and the plan that Verizon is proposing is in concert with that grand vision for the area,” John Vazquez, vice president of global real estate, said in the statement.
Cushman & Wakefield Inc. has been hired to market the space, said Nicholas Derasmo, a spokesman for the New York-based brokerage.
Verizon’s tower, formerly the New York Telephone Co. building, has suffered two blows in recent years. The structure was damaged during the Sept. 11 attacks in 2001 when terrorists destroyed the original World Trade Center, requiring Verizon to embark on seven years of restoration. The devastation caused hundreds of windows to be blown out and steel girders punctured the building, according to MacRostie Historic Advisors LLC, which consulted on the rehabilitation project.
It was struck again last year by Superstorm Sandy, which flooded the building. The view of Verizon’s opulent lobby under water became a symbol of the storm’s destruction after the company posted a picture of the damage on the Web.
It’s become increasingly attractive to convert New York office space into housing, something that’s already happened to previous Verizon buildings. Manhattan apartment prices climbed 5.9 percent in the first quarter from a year earlier as buyers competed for a tight supply of properties, according to a report by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
“With the lack of housing supply, especially in the new development space, I think every company, individual or institution with a building that has conversion potential is doing the math on whether they should take advantage of current conditions,” said Jonathan Miller, president of New York-based Miller Samuel Inc.
One Verizon office building in Chelsea on 18th St., which was sold in 2009 to a partnership led by JDS Development Group, was converted to a luxury condominium called Walker Tower. The 24-story project, where a top floor penthouse was listed for sale at $55 million, is expected to be completed this year.
Just four blocks from Verizon’s 140 West St. building is the landmark Woolworth Building, where the upper floors are being converted into 40 luxury apartment units. An investment group led by New York developer Alchemy Properties acquired the top 29 stories last year for $68 million, according to research firm Real Capital Analytics Inc.
Verizon has previously sold parts of other buildings, including 1095 Avenue of the Americas and 375 Pearl St. The company maintained communications equipment at both locations.
With 140 West St., Verizon will retain the executive offices and boardroom on the 28th and 29th floors, in addition to the lower floors. The building will still house both network and administrative employees and it will remain the corporate headquarters, said Ray McConville, a spokesman for the company.
As part of the move, about 1,100 mostly customer-service workers will be relocated to a call center in Brooklyn. Verizon said it is planning to make improvements, including a fitness center, at the Flatbush Avenue site.
Verizon shares rose 1.7 percent to $52.92 at the close in New York. The stock has climbed 22 percent this year.
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