Cuts in staff left surplus of office space
March 28, 2003
Goldman Sachs Group Inc. paid $40 million to end its lease early at 10
Hanover Sq. in lower Manhattan, as job cuts left the third-largest
securities firm with a surplus of office space.
Goldman will move out of the 532,000 square-foot, 22-story tower located
five blocks from the New York Stock Exchange by September 2004, said Peter
Rose, a company spokesman. With demand for office space downtown low, the
owner said he plans to convert the building to rental apartments.
Job cuts and retirements have left Goldman with more than 1 million square
feet of unused office space in lower Manhattan, its home for 133 years, said
Myers Mermel, chief executive of TenantWise Inc., a real
estate leasing and market research firm.
Rose declined to confirm Mermel's estimate. Offices below Canal
Street are 15.2 percent vacant, the most in five years.
The firm's work force has shrunk 15 percent since 2001, Rose said. As of
November, Goldman had 19,739 employees. Goldman's headquarters is at 85
Broad St., about three blocks south of 10 Hanover. Goldman has surplus
office space at 77 Water St., One Liberty Plaza and 180 Maiden Lane as well,
The $40 million payment was part of the $97 million of costs Goldman said
last week were related to cuts in the firm's global office space when it
reported its fiscal first quarter results.
Goldman uses all of 10 Hanover for a variety of operational functions, Rose
said. No decisions have been made regarding where the less than 1,000
employees will be moved.
The owner of 10 Hanover, Steven Witkoff, said he had intended to convert the
building to apartments when he bought the former Kidder Peabody & Co.
headquarters in 1996 for $15 million from the Helmsley family.
Witkoff is preparing an application for Liberty Bond financing for the
project, he said. Congress last year gave the city and state the authority
to issue Liberty Bonds up to $8 billion of tax-exempt bonds to finance the
post-Sept. 11 rebuilding of lower Manhattan.
"I believe in the long-term future of downtown," said Witkoff. "Some very
smart guys are putting their money into housing" downtown, "which will help
lead to a new 24-hour community down there."
The building's location, two blocks south of Wall Street, on a square that
gives it light from all sides, will also help, Witkoff said, as will
improvements Goldman built and paid for, such as a new lobby and a 30,000
square-foot health club.
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