MS Morgan Stanley

By Keiko Morris and Liz Hoffman 

Morgan Stanley is exploring a move of its headquarters from Midtown Manhattan to Hudson Yards, the vast development going up on the West Side, according to people familiar with the matter.

The bank is considering the purchase of the remaining 2 million square feet at 50 Hudson Yards, the planned tower where money manager BlackRock is also expected to move its headquarters, the people said, cautioning that the talks were in the early stage.

Morgan Stanley is also considering other sites within the Hudson Yards complex, some of the people said.

"We routinely review potential options for upgrading our workspaces," a spokeswoman for Morgan Stanley said. "As we consider plans to continue to upgrade our current office space, we are also in the very early stages of evaluating potential alternatives."

The 2.9 million-square-foot tower at 50 Hudson Yards is part of a massive mixed-use development under construction by Related Cos. and Oxford Properties Group.

Morgan Stanley owns its current headquarters at 1585 Broadway, a 1.3 million-square-foot skyscraper in Times Square. It also owns about 570,000 square feet in a Fifth Avenue building that houses its asset-management business, and a complex in Purchase, N.Y., for its retail-brokerage business.

The 2 million square feet Morgan Stanley is eyeing at Hudson Yards are more than its combined footprint in New York City. Should the company move, it isn't clear whether it would sublease or sell its current skyscraper, which New York City brokers have said could fetch more than $1 billion.

The Hudson Yards development has lured some of the biggest names in financial services, including BlackRock and private-equity firm KKR & Co. Wells Fargo & Co. is moving its New York securities business there.

BlackRock, the world's largest money manager, has entered into a letter of intent to lease 850,000 square feet across 15 floors. The building is designed for multiple tenants with distinct entrances.

Like many of its peers, Morgan Stanley started out on Wall Street itself, in an era when proximity to the downtown stock exchange was key. But like others, it moved to Midtown, eventually buying 1585 Broadway for about $180 million in 1993, after the building's original developer went bankrupt.

It has recently been renovating floor-by-floor, many of which haven't been updated since the 1990s. The windows on the lower floors are flooded with garish neon from Times Square billboards, employees say.

Big banks tend to own their headquarters, bucking a trend among many U.S. companies to be more asset-light and free up cash trapped in real estate. In part, that is because of the architectural demands of their trading businesses, which require precise layouts and hookups to clients, data centers and clearinghouses.

J.P. Morgan Chase & Co. owns 270 Park Avenue, its global headquarters, and Goldman Sachs Group Inc. spent $2 billion to build the glass-walled, airy skyscraper at 200 West Street, which opened in 2010. Citigroup Inc. recently bought its Tribeca headquarters from its landlord.

Morgan Stanley had once planned a Times Square "campus," and developed a tower on Seventh Avenue, across the street from its Broadway base. But after the Sept. 11, 2001, terrorist attacks, the firm backed away from the plan, wary of putting too much of its head count and infrastructure in the same space.

It sold that building to Lehman Brothers, which had lost its own headquarters in the attacks. It is now the U.S. home of Barclays PLC.

Write to Keiko Morris at Keiko.Morris@wsj.com and Liz Hoffman at liz.hoffman@wsj.com

(END) Dow Jones Newswires

February 10, 2017 02:48 ET (07:48 GMT)

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