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Thread: Midtown Manhattan: Town Houses Used by Banks Are for Sale

  1. #1

    Default Midtown Manhattan: Town Houses Used by Banks Are for Sale

    From New York Times
    December 9, 2001

    Midtown Manhattan: Town Houses Used by Foreign Banks Are for Sale

    During the 1990's as a wave of smaller foreign banks set up operations in this country, some of them decided not to occupy space in standard, multitenant buildings. Instead, they purchased town houses where they could be the sole occupants in some of the priciest neighborhoods in town.

    The elegant buildings, many of them mansions from New York's Gilded Age, helped establish the banks' image in a crowded city, and the small spaces in the buildings provided privacy for customers who had no interest in having their transactions observed by strangers.

    "It's an image issue, clearly," said Andrew Davidoff, the chief executive of Emmes Group, which bought the Rockefeller town houses at 13-15 West 54th Street from a Danish bank called Unibank earlier this year. "These buildings are like the ones they operate in Europe. And because they are in the Plaza district, they are close to where their clients will be when they are in New York."

    The buildings at 13 and 15 West 54th Street were owned by members of the Rockefeller family from the early part of the last century until the death of Nelson A. Rockefeller, the former governor and vice president, in 1979. Other buildings in which banks set up their American operations may have lacked the pedigree of the Rockefeller building, but many came equipped with grand staircases, paneled walls and ornate fireplaces.

    Many of the banks spent heavily on renovations to bring buildings that were built at the turn of the last century up to date in heating, cooling, lighting and telecommunications. But as times change, so do tastes in real estate, and some of the bank buildings have been sold or are on the market.

    In some cases, a bank that bought and renovated a building has been swallowed up in a merger by a larger institution that regards a town house not as a cozy headquarters, but as inefficient space for a branch operation and as an asset to be converted into cash.

    One that is currently for sale is owned by Banco di Napoli at 4 East 54th Street. The asking price for the building, which was designed by Stanford White and completed in 1898, is $28.5 million.

    Banco di Napoli, a regional bank in Italy, bought the six-story mansion in 1994 for $12.8 million and did a complete $7 million renovation of the building, which had been originally designed as a residence for a single family.

    The renovation included the addition of one floor, which, to meet landmark rules, cannot be seen from the street. The building has a total of 23,000 square feet of space.

    Last year the bank was acquired by a larger Italian institution, Sanpaolo IMI Bank, which has its American headquarters at 245 Park Avenue at 46th Street. The acquiring bank is reorganizing its New York operations and, while it may retain some space at 4 East 54th, has decided to offer the asset for sale.

    It would not be unusual for a bank to retain some space in a location where it is well known. Mr. Davidoff said a successor to Unibank still has operations at the Rockefeller buildings, which are connected at the rear to a modern 13-story office building at 20 West 55th Street.

    He said the bigger building was what most interested Emmes in the $30 million property, although the landmark town houses are fully occupied. Typical tenants for such properties are financial services companies, for whom the cost of real estate is minute in relationship to revenues generated.

    He said the private banking division of U.S. Trust had operations in an adjacent building at 11 West 54th and had broken through a wall to add space in the Rockefeller buildings. "If I had more floors, I could rent them, too," he said.

    "It is my sense that bankers feel better in these kind of offices than as anonymous tenants in a multiple office building," he said.

    Richard Baxter, an executive managing director of Insignia/ESG, a brokerage and services company that is managing the sale of 4 East 54th Street, said Banco di Napoli followed a familiar route when it began operations in New York. After looking at the market, it decided to buy the building rather than rent space elsewhere.

    "They bought the building, renovated it, and now it is being sold to recoup the profits," Mr. Baxter said. "It is a purely economic move."

    THE building was built as a residence for a family named Stokes, Mr. Baxter said. However, the Stokes marriage failed before the building was finished in 1898. In 1900 it was sold to William Moore and his wife, who lived there until her death in 1955. Subsequently, it had a variety of occupants until it was purchased by Banco di Napoli in 1994.

    The building is unusual for a New York town house because it is 36 feet wide, compared with the more typical 20 to 25 feet, Mr. Baxter said.

    Another bank town house on the market is one currently occupied by LBS Bank, which is based in Slovenia, an independent country that was once part of Yugoslavia. The seven-story, 20,500-square-foot building is at 12 East 52nd Street and has an asking price of $14 million.

    The bank needs to expand beyond the five floors it has in the building and may opt for an American-style configuration with all operations on one floor, said Noel L. Berk, a principal of Mercedes Berk Ltd., which is trying to arrange the sale in connection with Cushman & Wakefield, the brokerage and services company.

    "Small foreign banks like to own their own buildings," Ms. Berk said. "It gives them an identity for 5 or 10 years, but then their needs change."

    When they first come to New York, she said, the banks like to operate the way they do at home, with each division on a separate floor. But as they become accustomed to this market, they begin to see the value of integrating operations and find the town houses an obstacle to more efficient operations, she added.

    "The American way of managing space is very different from Europe," said Ron Cohen, an executive managing director of Insignia/ESG. "As they move to the United States, they learn there are more efficient ways to operate."

    Another factor prompting foreign banks to leave their beautiful town houses for office buildings is the decline of private banking at smaller institutions, Mr. Cohen said.

    A mansion with a discreet brass plate next to the front door appeals to the clientele of private bankers, he said. "They want a small, private building where they can come and meet with their advisers," Mr. Cohen said. "Unfortunately," he said, private bankers "are a dying breed. With globalization, they cannot maintain the same level of service and location."

    Also on the market is a 10,500-square-foot building at 124 East 55th Street on what was once known as "bankers row" between Lexington and Park Avenues, Ms. Berk said. The building, a Tudor-style structure with original fireplaces, was owned for many years by the Bank of Chile. The bank sold it to an investment group, which ultimately found it unsuitable, she said, putting it back on the market with an asking price of $7.9 million.

    The buyer of any of these buildings could easily be another bank, particularly because they are in areas zoned for commercial operations. Nonprofit organizations can occupy properties in residential areas, but profit-making companies are confined to commercial zones, Ms. Berk said. The zoning would also allow the reconversion of the buildings for residential use, she said, although many of the facades are protected by landmark designation.

    An executive of Emmes suggested earlier this year that the Rockefeller buildings could become home to someone who could come up with $20 million.

    "It is not that small foreign banks do not want to operate in mansions and town houses," Ms. Berk said. "They do, until their needs change. I have been showing these buildings to banks and consulates." *

  2. #2

    Default Midtown Manhattan: Town Houses Used by Banks Are for Sale

    The buildings at 13 and 15 West 54th Street were owned by members of the Rockefeller family from the early part of the last century until the death of Nelson A. Rockefeller, the former governor and vice president, in 1979.

    11 West 54th Street building.

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