Goldman Sachs deal on again?

Real Estate Weekly, August 17, 2005 by Elaine Misonzhnik

After months of cajoling by city and state officials, Goldman Sachs & Company has reportedly decided to go ahead with its headquarters project at site 26 of Battery Park City.

Goldman is expected to receive $600 million in additional Liberty Bonds and $150 million in tax credits in exchange for constructing a 40-story, 2 million s/f building in lower Manhattan.

According to Adam Foster, senior vice president with CB Richard Ellis, the mere suggestion that Goldman will remain in the area has resulted in an increase in inquiries about Larry Silverstein's 7 World Trade Center, the property he is marketing.

"Goldman Sachs is one of the most important and largest tenants downtown, so it sends a signal that a major financial services company will keep its headquarters in lower Manhattan," Foster said. "This is something that has been much anticipated and just the fact of the confirmation will bring a huge amount of positive momentum to the market."

Tom Nardacci, a spokesman for the Alliance for Downtown New York, said Goldman's decision has symbolic, as well as commercial, significance. "We've been really pushing to get this done and it is very encouraging," he said. "The building at site 26 is a very significant step for downtown recovery. And Goldman Sachs is downtown Manhattan's largest commercial tenant and has been a large part of it being a preeminent business district, so this will ensure they will keep this designation for the future."

During his weekly question and answer session with media outlets, Mayor Bloomberg cautioned that the deal has yet to be finalized, but said he was always confident Goldman would remain loyal to lower Manhattan.

"It's hard to overestimate the impact of the Goldman decision. This really is a great vote of confidence in the future of lower Manhattan. It's in Goldman's interest, and clearly in the city's best interest," he said.

However, getting the financial giant to agree to the deal took some convincing. The company threatened to withdraw its plan earlier this year because of a proposed underground tunnel at West Street that would pass directly under its new building. The Department of Transportation then took the tunnel off the table. Goldman Sachs also lobbied hard for additional government funding, after a $160 million in tax credits from the New Jersey State government proved not to be enough to fill up its office tower in Jersey City.