Starting at Ground Zero
TEXT OF STORY
KAI RYSSDAL: Years of negotiations mixed with some threats and cajoling have paid off for New York City. JP Morgan Chase said today it’s moving back down to Lower Manhattan, at the World Trade Center site.
Mayor Michael Bloomberg and New York Governor Eliot Spitzer are hoping Chase will become an anchor tenant, encouraging others who left after September 11th to head back downtown. But Marketplace’s Alisa Roth reports the bank didn’t come cheap.
Alisa Roth: JP Morgan Chase will invest about $2 billion to build its new headquarters near Ground Zero.
Steven Spinola heads the Real Estate Board of New York. He says the bank will act as an anchor.
Steven Spinola: It will say to tenants, look, if JP Morgan is leading the way, why shouldn’t we consider it? And why shouldn’t we go down there and be a neighbor with JP Morgan?
Which he says will help the area’s real estate market.
Spinola: It probably just increased the asking rents for office buildings in Lower Manhattan because of JP Morgan’s commitment.
Plus, he says, all those bank employees will spend cash in neighborhood stores.
But all those economic benefits won’t be cheap. The city and state are paying JP Morgan around $200 million worth of incentives to move there. Mayor Bloomberg and others say they’re incentives available to any company that builds downtown.
And it’s a lot less than JP Morgan had originally asked for. In 2005, competitor Goldman Sachs got a reported $650 million to move downtown. Chase wanted the same deal.
Economist James Parrott is with the Fiscal Policy Institute, which looks at New York budgetary issues. He says New York shouldn’t have to pay to get high-rolling tenants.
James Parrott: With the strength of the real estate market in Manhattan today, there is absolutely no need for public subsidy to induce construction.
Around 7,000 bank employees will move to the new building from the company’s current headquarters in Midtown. The building is supposed to open in 2012.
In New York, I’m Alisa Roth for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
