JPMorgan Sells 23 of Its Commercial Real Estate Properties
A total of 23 commercial real estate properties owned by J.P. Morgan Chase across the country are being offered for sale to eliminate the weight of holding unused space.
The property portfolio for sale includes 4 noted buildings located in prime areas: One Chase Manhattan Plaza and Four New York Plaza which are both near Wall Street, a skyscraper in downtown Seattle formerly occupied by Washington Mutual and which still houses the Seattle Art Museum, and a landmark 1929 Art Deco structure in Houston which was once leased by Texas Commerce Bank.
According to analysts, J.P. Morgan has accumulated a lot of space after acquiring Bear Stearns Cos. and Washington Mutual in 2008. The properties for sale have a combined area of 7.1 million square feet and could raise over $1 billion.
In New York, J.P. Morgan has moved many of its investment banking operations and employees into Bear Stearns’ former headquarters in Manhattan, which is near J.P. Morgan’s operations on Park Avenue.
According to analysts of Real Capital Analytics, it may take time and some sales strategies to sell such a large property portfolio in these times of tight financing and corporate effort to reduce costs. Across the U.S., only $5.7 billion worth of office spaces were sold in the first half of this year, a significant drop from the 30.9 billion worth of office spaces sold in the first half of 2008.
In Manhattan, only 8 office towers were sold in the first half of this year, again a big drop from the 43 office properties sold in the same period last year. In the first half, the average price of office space sold was $470 per square foot, a substantial drop from the $877 average price per square foot in the same period last year.
Real estate analysts said that J.P. Morgan needs to offer incentives to be able to sell the buildings, such as sale-leaseback deals to help ensure a flow of income for the buyer. Dan Fasulo of Real Capital said that any buyer of Chase Manhattan Plaza would first need to be assured that J.P. Morgan would lease a large portion.
Analysts cite as examples the New York City buildings offered for sale by HSBC and New York Times Co. They said HSBC got offers from established developers when it offered a sale-leaseback contract for the next ten years. New York Times sold its Manhattan building when it signed a sale-leaseback deal with W.P. Carey.
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