Feeling Roomy, J.P. Morgan Shops Its Space
The Wall Street Journal reports: J.P. Morgan Chase & Co. is marketing 23 office properties across the nation in an effort to rid itself of excess space. But the bank's timing, amid the worst property market in decades, means any sale is likely to come with sizable concessions.
The portfolio of properties for sale, with a combined 7.1 million square feet of space, includes four notable towers: One Chase Manhattan Plaza, near Wall Street; Four New York Plaza, also in the Financial District; the former headquarters of Washington Mutual in a downtown Seattle skyscraper that also houses the city's art museum; and a landmarked 1929 Art Deco building in Houston, the former headquarters of Texas Commerce Bank.
J.P. Morgan's real-estate holdings have grown significantly since the bank's acquisitions last year of Bear Stearns Cos. and the banking operations of Washington Mutual. Bank executives have repeatedly said they have too much real estate and intend to sell some of the office space.
J.P. Morgan already has moved many employees of its investment bank into Bear's former headquarters in Midtown Manhattan, which is located around the corner from J.P. Morgan's corporate offices on Park Avenue.
But selling such a large swath of real estate won't be easy. Values for office space have plummeted as corporations reduce staff. And with financing hard to come by, fewer deals are getting done. Across the country, $5.7 billion in office-building sales closed in the first half of 2009, compared with $30.9 billion in the first half of 2008, according to research firm Real Capital Analytics.
Just eight office buildings were sold in Manhattan in the first half of 2009, at an average price of $470 a square foot, according to Real Capital Analytics. In the same period last year, 43 properties changed hands in Manhattan at an average price of $877 a square foot.
Real-estate experts say that in order to sell some of the buildings, J.P. Morgan must offer incentives, including guaranteeing a building's income stream by structuring a sale-leaseback transaction. "They're not going to be able to sell Chase Manhattan Plaza without leasing back a significant amount of space," said Dan Fasulo, head of research at Real Capital Analytics.
View the full article on The Wall Street Journal: Feeling Roomy, J.P. Morgan Shops Its Space
Posted by: Nina Turner