Saturday, December 04, 2010

Citibank, Deutsche Bank, Firefighter Robert Beddia, and Firefighter Joseph Graffagnino

Before the September 11th attack occurred, Deutsche Bank bought 60 Wall Street for $600 million, with no certain or known plans for the building. However, after the 9/11 terrorist attack damaged 130 Liberty Street, Deutsche's main building, the bank was able to move more than 4,500 of its personnel into the newly acquired building without a problem.

Later, Deutsche Bank agreed to sell and lease back its new North American headquarters for nearly double what it paid to acquire the property six years before, when Paramount Group paid nearly $1.2 billion for the 47-story Class A building. The deal occurred just in advance of a major recession and decline in real estate values, with millions of Americans out of work and losing their homes to bank foreclosure.

 NEW YORK - AUGUST 24: New York firefighters wait for the body of firefighter Robert Beddia to emerge out of St. Patrick's Cathedral August 24, 2007 in New York. Beddia was killed with another firefighter battling a blaze at the abandoned Deutsche Bank building next to Ground Zero.

In other news, a October 21, 2001 Wall Street Journal article, "Citigroup Considers Leaving Lower Manhattan, tells a similar story
More bad news for downtown Manhattan: Now it's Citigroup that's thinking about transferring one of its operations and hundreds of employees out of the area. Making matters worse, the operation isn't even close to the World Trade Center disaster zone, indicating that the softness in the financial-district market is spreading.

The operation, which is part of Citigroup's Salomon Smith Barney unit, is housed in 10 floors of the office tower at 125 Broad St. Citigroup's lease runs for another 8 1/2 years but it has hired real-estate firm CB Richard Ellis to sublease the 330,000 square feet, people familiar with the situation say. The bank also has informed its landlord, developer Steve Witkoff, that it plans to put the space on the sublease market, the people say. Citigroup and Mr. Witkoff decline to comment.

Until now, most of the downtown firms that have defected had been located west of Broadway in or close to the still-smoking World Trade Center site. Citigroup would be leaving a part of downtown east of Broadway that, so far, hasn't suffered a sharp rise in vacancy.

Citigroup's plans also are surprising because many real-estate experts figured the bank had too little space, not too much, in the wake of Sept. 11. Citigroup immediately had to relocate 2,500 employees who had been housed in 7 World Trade Center, a building that collapsed a few hours after the Twin Towers. Most of those employees were subsequently housed in existing bank offices throughout the New York metro area. But even after that, the bank finds itself with surplus space.
Citibank suddenly, and without foreknowledge, loses over 1,200,000 square feet of space utilized by its Salomon Smith Barney unit in Larry Silverstein's Building 7, yet are able to backfill those displaced workers into their pre-existing corporate real estate holdings, and then are still able to relinquish another major block of Salomon Smith Barney real estate---this one of 330,000 square feet? How is this done?

TenantWise analyzed the disruption to the downtown commercial real estate market caused by the September 11th attacks, and issued a WTC Tenant Relocation Summary Special Report, called Destroyed Buildings: Tenant Relocation Summary as of September 2003, which is maintain online. The report indicates a consistent and marked decline in the square-footage requirements of the relocating WTC companies.

The report contains some recognizable errors. It tells us that Empire/Blue Cross, who had signed a 461,000 s.f. lease at WTC1 in 1997,
"signed a lease for 105,429 s.f. at 11 West 42nd Street and for 322,000 s.f. at MetroTech 9 South in Brooklyn for 1,300 employees. These commitments represent 100,000 s.f. less than previously occupied at WTC."
Simple arithmetic however, makes that a net loss of 33,571 s.f.

TenantWise says that Cantor Fitzgerald leased 245,000 s.f. at WTC, and after the attacks, relocated to 80,000 s.f. at 135 East 57th Street and decentralized its operations into two other new locations: Reston, VA and London. However, a New York Times article from January 1997, said,
"[t]he company has renewed its lease for the 104th and 105th floors -- the top office floors in the 110-story, 4.7 million-square-foot tower -- and has added the 103d and part of the 101st floors."
Why Cantor was expanding its office requirements in 1997, at the same time they began significantly downsizing as a result of advances in electronic trading technology, does not represent a failure of corporate forward thinking, but it is key to analyzing what this real estate data represents. In my opinion, adding on one-and-a-half floors of tenancy represents a "Potemkin office" strategy that began as early as the bombing in 1993, which was meant to structure the building's occupancy in anticipation of their eventual destruction. Howard Lutnick's "brother Gary" was said to have worked on the 103rd floor. This represents a net loss of 75,000 s.f in space required by Cantor Fitzgerald.

The decline in the need for office space for tenants who relocated after the disaster is striking. In only one or two cases did a firm increase their square footage in a temporary move or permanent relocation. Keep in mind, that each floor of the World Trade Towers had a rentable area of approximately one-acre in size, (an acre is 43,560 square feet.) The term "backfill" is used by commercial real estate brokers to describe an office tenant who relinquishes space but transfers the employees housed there into other corporate offices without having to lease additional new space.

The case for a Potemkin-office strategy is made most unambiguously in the 1997 lease signed by Oppenheimer Funds for 231,000 s.f. at WTC2. After the attacks, Oppenheimer signed a 10-year lease at 498 Seventh Avenue for 135,000 s.f., for a net loss: 96,000 s.f. No mergers, acquisitions, spin-offs, backfills or back offices were announced as part of this transition.

245,156 s.f. at WTC2, Fiduciary Trust signed a part direct/part sublease for 156,000 s.f. at 600 Fifth Ave and occupied the space in November. Approximately 650 employees will operate from 8 floors at this location. Net Loss: 89,156 s.f.

100,000 s.f. at WTC1 (floors 49-51 sic), Dai-Ichi Kangyo Bank is now part of Mizuho Corp. Bank, located at 1251 Ave of Americas and at Harborside Plaza in Jersey City, NJ. Net Loss: 100,000 s.f.

182,956 s.f. at WTC2, Fuji Bank is now part of Mizuho Corp. Bank and is operating from Mizuho offices at 1251 Ave of Americas and Harborside Plaza in NJ. Net Loss: 182,956 s.f.

179,244 s.f. at WTC5, Credit Suisse First Boston occupied 1 Madison Avenue and 11 Madison Avenue and backfilled approximately 700 employees from 5 WTC. CSFB has no new space requirements and sublet its space at 277 Park Avenue. Net Loss: 179,244 s.f.

45,540 s.f. at WTC2, Commerzbank Capital Markets backfilled into existing space at 1251 Avenue of the Americas. Net Loss: 45,540 s.f.

26,367 s.f. at WTC2, IOC/Regus is operating from an existing office at 245 Park Avenue. (Regnus signed a lease for half of the 93rd floor in WTC2 in June of 2001. After the attack, the Guardian reported on September 14, 2001, that "Regus Business Centres said five employees unaccounted for but trying to ascertain precisely how many clients were in the offices. Concerned toll could rise significantly." Net Loss: 26,367 s.f.

40,000 s.f. at WTC2, Continental Insurance is in a long term lease at 40 Wall Street. Offices moved prior to the attacks. Net Loss: 40,000 s.f.

10,000 s.f. at WTC1, Zim-American Israeli Shipping had put its 16th floor space at the World Trade Center up for sublease and moved a majority of its employees to Norfolk, VA before the attack. Now, a few employees have moved into a smaller 5,000 s.f. office at 1000 South Avenue in Staten Island, NY. Net Loss: 10,000 s.f.

18,591 s.f. at WTC, TD Waterhouse Group, Inc. A move to a new headquarters in Jersey City was in progress since June 2001 and many employees from WTC and other locations had already relocated there. After the attack, WTC employees moved to the new headquarters in Harborside, Jersey City, and a few to an existing office at 100 Wall Street. Net Loss: 18,591 s.f.

12,211 s.f. at WTC, Barclay's offices were relocated from WTC1 to 222 Broadway before the attack. Has regained possession of its space at 222 Broadway. Net Loss: 12,211 s.f.

2WTC 50,903 s.f. GBI Capital/ Ladenburg Capital Management will abandon both their 21,970 s.f. at 22 Cortlandt St. and WTC2, GBI will backfill both into existing Ladenburg offices at 590 Madison Avenue and in Long Island. Net Loss: 50,903 s.f.

25,000 s.f. at WTC, World Travel employees operated a small office for Sidley Austin Brown & Wood and relocated with the law firm to 787 7th Avenue. (a half-acre sized travel office serving a mid-sized law firm?)

48,000 s.f. at WTC, Washington Group relocated to 30,000 s.f. at 2 Penn Plaza Net Loss: 18,000 s.f.

155,490 s.f. at WTC2, Verizon had 400 employees, backfilled elsewhere 155,490 Net Loss: 155,490 s.f.

20,750 s.f. at WTC1, Global Crossing Holdings Ltd. used space on the 83rd floor as record storage and will not replace it. Net Loss: 20,750 s.f.

10,325 s.f. at WTC, The Nishi-Nippon Bank closed its New York office at 1 WTC and no longer has a New York presence. Net Loss: 10,325 s.f.

40,000 s.f. at WTC1, Asahi Bank is now Resona Bank Ltd., and operates from 8,000 s.f. on the 19th floor of 546 5th Ave. Net Loss: 32,000 s.f.

13,262 s.f. at WTC, Friends Ivory & Sime, Inc. closed its New York office and relocated to London. Net Loss: 13,262 s.f.

57,000 s.f. at WTC, Fireman's Fund, an Allianz Company, relocated to 36,000 s.f. at 75 Wall St. Net Loss: 11,000 s.f.

89,162 s.f. at WTC, Sun Microsystems relocated to 78,200 s.f. on floors 3 and 4 at 101 Park Avenue. Net Loss: 10,962 s.f.

27,000 s.f. at WTC, Seguros Commercial closed its New York Office and relocated to headquarters in Plano, TX. Net Loss: 27,000 s.f.

59,000 s.f. at WTC, SCOR consolidated with a newly acquired company and relocated WTC employees to existing offices at 199 Water Street. (SCOR leased in WTC in Sept. 1995. "SCOR had been at 110 William Street, he said, and bought a smaller company, Unity Fire and Marine, whose offices were at the trade center. "When it bought that company," he said, "SCOR decided it wanted to consolidate the two offices. It had a choice of doing it here or on William Street.") Net Loss: 59,000 s.f.

10,000 s.f. at WTC, Unistrat joined with affiliate company SCOR in space at 199 Water St. Net Loss: 10,000 s.f.

30,000 s.f. at WTC, Sandler O'Neill relocated to 919 Third Avenue (Into existing, or newly leased space? TenantWise's wording isn't clear.)

33,000 s.f. at WTC, Ohrenstein & Brown relocated to 20,000 s.f. at 1 Penn Plaza with 60 employees. Net Loss: 13,000 s.f.

44,325 s.f. at WTC, National Development & Research Institute relocated to 39,000 s.f. at 71 West 23rd Street. Net Loss: 5,325 s.f.

22,500 s.f. at WTC, NAIC Securities relocated to 16,000 s.f. at 1411 Broadway, 9th floor. Net Loss: 6,500 s.f.

80,000 s.f. at WTC, NY Shipping relocated to 18,000 s.f. of new office space in Iselin, NJ and to existing offices to 45 Broadway. Net Loss: 62,000 s.f.

24,539 s.f. at WTC, N.Y. Institute of Finance backfilled space from Pearson, Inc., parent company, at 1330 Avenue of the Americas for permanent relocation Net Loss: 24,539 s.f.

92,232 s.f. at WTC, Kemper Securities signed a lease for space at 30 Rockefeller Center on 11th & 12th floors for 65,381 s.f. Net Loss 26,851 s.f.

15,000 s.f. at WTC, John J. McMullen Associates has relocated to 10,000 s.f. space at 70 Wood Avenue South, Iselin, NJ for 3 years with about 35 employees. Net Loss: 5,000 s.f.

180,000 s.f. at WTC, Guy Carpenter, a Marsh USA company, relocated its headquarters to 105,255 s.f. at 1 Madison Avenue and also placed some employees in new Marsh space in Hoboken, NJ. Net Loss: 74,745 s.f.

10,000 s.f. at WTC, Drinker Biddle & Reath is relocating to existing offices in Florham Park, NJ, and a new 5,000 s.f. space at 30 Broad Street. Net Loss: 5,000 s.f.

58,500 s.f. at WTC, Baseline signed a sublease for 58,000 s.f. of permanent office space at 395 Hudson Street, 6th floor, for approximately 200 employees. (Baseline had subleased at the WTC2 in March 1999, from a previous tenant, Georgeson & Company, who was already in the process of upgrading the floors, having about finished the full 77th floor. Baseline intended to put executive offices on the half-floor above. The floors were connected by escalator.

11,612 s.f. at WTC, AT&T relocated to existing offices, including headquarters at 32 Avenue of the Americas, 811 10th Ave, 33 Thomas St, 75 Broad. AT&T will not need any additional space. Net Loss: 11,612 s.f.

111,398 s.f. at WTC, Standard Chartered Bank relocated to 92,000 s.f. at 1 Madison Avenue. Net Loss: 19,396 s.f.
American Express had 55,000 s.f. at 100 Church St., 23,000 s.f. at 140 Broadway, 1,120,500 s.f. at 3WFC3, and 106,117 at 7WTC, who were backfilled into other spaces. Net Loss: 106,117 s.f.

1,415,000, s.f. at 190 Liberty Street, Deutsche Bank employees from downtown locations temporarily relocated to existing offices. In 2001, before the 9/11 attacks, Deutsche Bank had purchased 60 Wall St. from J.P. Morgan Chase. Net Loss: 1,415,000 s.f.

1,202,900 s.f. at WTC7, Citigroup/Soloman Smith Barney backfilled existing space in Midtown; Rutherford, NJ; and Stamford, CT. Net Loss: 1,202,900 s.f.

Many of the other major lease signings that followed the 1993 bombing, which I consider to be the effective start date for the September 11th, 2001 conspiracy, like those of Bankers Trust (Deutsch,) Bank of America (who signed a lease for eight full floors shortly after the bombing,) Dow Jones, Thacher, Proffitt & Woods, and Exco Noonan should also be examined for evidence they took on unneeded space (Sandler O'Neill moved to their 104th-floor perch in WTC2 just four days before the bombing.)

CoStar reported an additional 440,882 square feet of space in the North Tower, and the South Tower, as being marketed on 9/11.

This loss of 1,553,900 square feet in the World Trade Center proper, 1,534,513 square feet in Building 7, which was also completely destroyed, and the 1,415,000 square feet in Deutsch Bank's 130 Liberty Street, an adjoining tower to the trade center, linked together by an elevated bridge to space Deutsch leased in WTC4, a tower which had to be dismantled following the attacks, totals 4,944,298 square feet of office space, but does not represent the complete picture of the non-existent and false tenancy at the World Trade Center in advance of September 11th attack. But it is certainly enough to open our eyes to the collusive secret agreements between a wide swath of business interests, who collective agreed to attack themselves, as part of a plan for war and profit.

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