JPMorgan Chase & Co. is in early negotiations to build a new headquarters complex in the area of New York's Hudson Yards, the burgeoning district under development on the far west side of Manhattan.
The largest U.S. bank wants to build two towers totaling 4 million square feet (372,000 square meters), which would cost about $6 billion, a person with knowledge of the discussions said. The company is in talks with developer Related Cos., New York City and the state for a deal, which could fall apart as the sides negotiate subsidies and costs.
The bank has requested at least $1 billion in property-tax abatements in the form of payments in lieu of taxes, or PILOT, and other subsidies, which city officials have rejected, said Wiley Norvell, a spokesman for Mayor Bill de Blasio. The city already has invested more than $1 billion in the far west side area, where Related is planning a $20 billion development, to make the neighborhood commercially viable, he said.
"We can't even have a discussion for changing the PILOT until you know whether they will even have a building because negotiations are still being conducted between the bank and Related, which the city has been trying to facilitate," Norvell said in an interview.
A move by JPMorgan to Hudson Yards potentially would bring about 16,000 jobs to the area, while reducing or ending JPMorgan's longtime presence on Park Avenue just north of Grand Central Terminal, said the person with knowledge of the talks, who asked not to be named because of the preliminary nature of the discussions.
If the deal goes forward as proposed, the bank probably would sell its 1.3 million-square-foot headquarters building at 270 Park Ave. as well as 383 Madison Ave., a tower completed in 2001 as the headquarters of Bear Stearns Cos., which JPMorgan took over when it bought that firm in 2008, the person said.
Joseph Evangelisti, a JPMorgan spokesman, and Joanna Rose, a spokeswoman for Related, said they couldn't comment on the talks, which were reported today by the New York Times. Jason Conwall, a spokesman for New York State's Empire State Development Corp., didn't immediately respond to a request for comment.
For the past two weeks, Alicia Glen, the city's deputy mayor for economic development, has been working to get Related and the bank to come to an agreement and hasn't been negotiating with JPMorgan on subsidies, according to Norvell.
Glen said in an e-mail that "there's no way that the city would entertain a demand for a billion dollars in additional incentives at Hudson Yards. We have always been willing to engage with them in a dialogue about how we could be helpful in making a move more feasible."
The bank earlier this year began to review its 11.4 million square feet of New York property holdings, looking at both Hudson Yards and the World Trade Center in lower Manhattan as possible places to consolidate operations, a person briefed on the discussions said in August.
JPMorgan is now focusing most of its attention on two adjacent sites just north of Related's Hudson Yards development, according to two people with knowledge of the talks. Related controls the land the bank is considering for its towers.
Related is building two skyscrapers at the 26-acre (10.5- hectare) Hudson Yards complex, one slated to be the headquarters of Time Warner Inc. and the other for the luxury-handbag maker Coach Inc. The developer also plans a retail complex to be anchored by Manhattan's first Neiman Marcus department store. A platform over the rail yard is under construction.
JPMorgan has about 20,000 employees in New York City, plus another 7,000 workers at Chase bank branches around the city, which aren't part of these talks, one of the people said. The bank also has another 10,000 workers in upstate New York.
Large investment banks have been under pressure to boost profits while contending with tighter regulations in the aftermath of the 2008 credit crisis, which left Lehman Brothers Holdings Inc. bankrupt and prompted the U.S. government to support the industry. Banks have been consolidating operations and seeking lower-cost offices for employees who don't interact with clients.
In June, JPMorgan received from the state of New Jersey $22.5 million of annual tax credits for 10 years to create 1,000 jobs and retain about 2,600 others. The bank has offices in Jersey City and has said it intends to expand there.