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NYSE to move across street
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December 22, 1998: 6:17 p.m. ET
Exchange strikes deal with New York to keep trading in lower Manhattan
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NEW YORK (CNNfn) -The New York Stock Exchange announced an agreement Tuesday with the city and state of New York to keep the fabled trading floor in lower Manhattan into the next century.
The agreement ends months of speculation that the exchange might relocate its operations across the Hudson River to New Jersey, which reportedly had offered as much as $1 billion in incentives to attract the world's largest marketplace for equities.
"We look forward to continuing to work hand-in-hand with Mayor (Rudolph) Giuliani and Governor (George) Pataki and their teams to ensure that New York remains the center of the global financial community," NYSE chairman and chief executive Richard A. Grasso said in a statement.
"It will keep the financial sector's center of gravity in lower Manhattan and will solidify our role as the financial capital of the world," Giuliani said in a separate statement..
Total cost of this project will be slightly less than $1 billion, officials said on Tuesday.
Under terms of the agreement announced by the exchange on Tuesday, the city and state governments will be responsible for acquiring the land and building the new facility on a site across Broad Street from the exchange's existing headquarters.
The new building -- to be constructed on the block bounded by Broad, William and Wall streets and Exchange Place in the financial district -- will feature a 650,000-square-foot exchange facility including two 50,000-square-foot trading centers, to be built to NYSE specifications.
The expansion will effectively triple the amount of space available to traders now on the exchange's single, 36,000-square-foot trading floor, a spokesman said.
On top of that, the city and state plan to erect an 800,000-square-foot office tower above the exchange's facility.
The city and state of New York will split the $400 million cost of site acquisition and construction, and the exchange will pay for $350 million in technology and trading floor systems.
In addition, the governments are offering the exchange a $160-million package of tax incentives, a spokesman at City Hall said.
That puts the total value of the project at about $910 million.
Construction is scheduled to begin in the second half of 2001, with occupancy planned for 2004.
The exchange's existing building, constructed in 1902, is expected to be used in the future to house executive and administrative offices and a New York Police Department substation.
During the initial 50-year lease, rent will start at $10 million per year, increasing by 15 percent at 10 year intervals, the exchange said. The NYSE has renewal options for 99 years.
The exchange had initially looked at the nearby site more than a year ago, when it started looking for ways to expand to relieve crowding. Its initial "atrium plan," which involved an above-street walkway connecting the existing building to the proposed new center, ran into difficulty because it would have required the alteration of the landmark facade on the historic building.
During its review of alternatives, New Jersey entered the picture, offering a package of incentives to lure the exchange to the Garden State.
Some six weeks ago, the city and state of New York came back to the exchange with the basic proposal whose acceptance was announced on Tuesday.
"We went around the horn, and we ended up where we started," an exchange spokesman said.
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