(Updates with state incentives in sixth paragraph.)
June 26 (Bloomberg) -- Bank of New York Mellon Corp. will move its headquarters to lower Manhattan’s Brookfield Place as part of an effort to scale down its office space and streamline operations.
The world’s biggest custody bank signed a 20-year lease for about 350,000 square feet (33,000 square meters) at 225 Liberty St., BNY Mellon said today in a statement. The building, formerly known as 2 World Financial Center, is part of a complex owned by Brookfield Property Partners LP.
The agreement ends the bank’s years-long search for a cost- effective alternative to its headquarters at 1 Wall St., which last month it agreed to sell to a venture led by Macklowe Properties for $585 million. For Brookfield, downtown Manhattan’s largest office landlord, it fills another part of about 3 million square feet of space at the complex left when leases by Merrill Lynch & Co. expired last year.
The move “gives us the opportunity to create a corporate campus with state-of-the-art facilities to serve our clients for decades to come,” said Gerald L. Hassell, BNY Mellon’s chairman and chief executive officer. “Our employees will have an exceptional work experience at 225 Liberty.”
The company’s predecessor, Bank of New York, has been in lower Manhattan since it was founded in 1784 by Alexander Hamilton. BNY Mellon had considered an office building on the Jersey City, New Jersey, waterfront, and had received a proposal of financial incentives from that state’s government, people with knowledge of those discussions said last month.
BNY Mellon was offered $23 million in tax credits and other incentives to stay in New York, according to Jerry Russo, spokesman for the Empire State Development Corp., which oversees corporate-retention efforts. Brookfield will get a rent credit of $1 million a year for 10 years beginning in 2016, he said in an e-mail.
Kevin Heine, a BNY Mellon spokesman, declined to discuss what, if any, any sweeteners the bank received.
BNY Mellon also owns a 25-story office building at nearby 101 Barclay St. The rent at 225 Liberty St. wasn’t disclosed.
Time Inc. decided last month to move its headquarters to the same Brookfield Place building after more than half a century in the Time & Life Building across from Rockefeller Center in Midtown. The magazine publisher agreed to lease 700,000 square feet at 225 Liberty St.
In a regulatory filing today, Time Inc. said it expects cash rental payments to Brookfield to start on Jan. 1, 2018, even though the lease takes effect at the beginning of 2015.
Free-rent periods, along with payments to cover at least some office-finishing expenses, are a common incentive landlords provide to attract tenants. Melissa Coley, a Brookfield spokeswoman, declined to comment on any incentives provided to Time Inc. or BNY Mellon.
The BNY Mellon lease, “combined with additional leases in advanced and progressing negotiations, will bring the occupancy level of the complex to nearly 90 percent, with positive momentum behind it,” Dennis Friedrich, CEO of Brookfield Office Properties Inc., a division of Brookfield Property Partners, said in a separate statement.
If deals expected in the next couple of months are completed, less than 400,000 square feet of the Merrill vacancy will remain, a person with knowledge of Brookfield’s efforts said this month.
BNY Mellon said it intends to restructure the floors at Brookfield Place to create an “open workplace,” taking advantage of natural light and designing areas for employee collaboration and mobility.