Morgan Stanley is set to pay $42 million for the 107-acre site, according to papers filed with the Westchester County Industrial Development Agency. The financial services firm plans to use the building, at 2000 Westchester Ave., as a data center and backup trading facility and will house as many as 2,000 employees there. However, the company plans to undertake a major capital improvement project before taking occupancy. After improvements are done, the total bill should total $227 million, which includes acquisition and construction costs as well as the purchase of equipment and other ancillary expenses.

The Chevron/Texaco deal was not driven by a program to replace space lost at the World Trade Center, sources close to the deal say. The company stresses that the WTC space has essentially been replaced and that the Harrison property is part of the firm's plan to "decentralize office locations for security and business continuity purposes" after the terrorist attacks of Sept. 11.

The new space will house approximately 2,000 employees. The firm had employed a total of 3,700 workers at the World Trade Center complex, 2,700 on 22 floors at the South Tower and 1,000 workers at 5 WTC. Morgan Stanley maintains a trading floor at its corporate headquarters at 1585 Broadway, according to Bret Gallaway, a company spokesman. Other holdings are leased space at 750 Seventh Ave. and 1633 Broadway as well as retail branch locations throughout New York City.

The headquarters building became available due to the merger of Texaco and Chevron and the subsequent relocation of the HQ to San Francisco. The complex had been home to Texaco since 1977.

Chevron/Texaco officials say that the company will retain approximately 80,000 sf at the building for the next year. The only other tenant at the property is Atlas Air, which relocated its corporate headquarters from Golden, CO, to 120,000 sf at the property in 2001. The company had signed a long-term lease at the building, which houses approximately 340 employees.

Morgan Stanley officials would not comment on the Atlas Air tenancy, but in documentation filed with the IDA, the firm notes that it eventually will occupy the property "alone as the tenancies of Texaco and Atlas Air expire."

An Atlas spokesperson says that she is not aware of any plans by Morgan Stanley but stresses the air-cargo firm has a long-term sublease. Atlas' lease with Texaco expires in 2012 with two five-year renewal options. "We have not had any discussions with Morgan Stanley about their plans for the building," she commented.

Instant Insights /

Morgan Stanley Closes in on Leaseback on 725,000-SF Chevron/Texaco HQ

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