A source close to the deal says Morgan Stanley went through a four-month search process before deciding on the sublease space and that it was a win-win situation for both parties. Wachovia is vacating the space this month and Morgan Stanley expects to move in the early summer. Owner Trizec Properties declined to comment on the transaction. Morgan Stanley is not just making moves in Lower Manhattan; the company also extended a lease through 2013 at Harborside Plaza 2 in Jersey City. For additional information, go to GlobeSt.com UPDATE: Morgan Stanley Re-Ups for 306,000 SF.

"It bodes well for Lower Manhattan," Shirley Jaffe, vice president of economic development with the Alliance for Downtown New York, tells GlobeSt.com. "It ratifies Lower Manhattan's position as an important center for financial services." Other firms planning an increased Downtown presence include Goldman Sachs which will construct a new office in the area.

Financial details of the transaction were not released office space on the concourse level is advertised at $40 per sf. Located at Water and Whitehall streets, the 50-story, 2.5-million-sf One New York Plaza was completed in 1970 and renovated in 1995. The property was acquired by a Trizec affiliate in 1999. Other tenants include Goldman Sachs, Smith Barney Inc. and the Battery Park Conservancy.

"There's 350,000 sf of space at One New York Plaza," says Peter Riguardi, president of Jones Lang LaSalle's New York office, which represented both Wachovia and Morgan Stanley. "We're optimistic this will be the impetus for other tenants to follow."