Expected Buyout of Select CIBC Operations Throws More New York Property Into Speculation Zone

NEW YORK CITY-Published reports, neither confirmed nor denied by spokespeople for either company, that Lehman Brothers is negotiating with CIBC Oppenheimer over the acquisition of CIBC retail operations and possibly investment banking have led to hypothetical debates over the deal’s impact on space in the city. This is one of several bank merger and acquisition deals that have people talking space availability.

Lehman Brothers reportedly does not have a significant retail presence and is seeking CIBC’s 600 brokers and their wealthy clients. Additional rumors indicate that Lehman is also eagerly seeking CIBC’s investment banking operations. These operations would be an overlap of Lehman’s with the noted exception in the area of high-yield, in which CIBC apparently excels.

“What becomes of the real estate property in deals like this depends on the duplication of facilities,” observes Peter Brooks, a principal for Ernst & Young. “In this case it doesn’t seem like there’s much overlap, which generally means they’ll maintain the retail and support office space.”

As to the possible overlap in investment banking operations, Brooks notes, “Without knowing all of the specifics, it doesn’t seem likely that this would result in a significant dumping of their property portfolio onto the market. This deal will very likely have no impact on the market here.”A similar deal, he observes, is Chase’s acquisition of J.P. Morgan operations. With little overlap, the chances of much property held by either company are slim to none. This is in contrast to the Chase and Chemical merger of yesteryear, which Brooks saw first hand as a Chemical employee. Hundreds of employees lost their jobs and retail space was vacated as their competing locations were consolidated. So too, this seems to be the case, if to a lesser extent, in the Donaldson, Lufkin & Jenrette buyout of Credit Suisse First Boston’s operations. Employees in Suisse’s high-yield debt and e-commerce divisions have lost their jobs and office space will probably become available in their New York and other American offices.

These deals all reflect the resurgence of the trend in bank mergers and acquisitions before the recession of the 1990s. Reports are published daily indicating that sources inside many significant New York-based companies are considering selling or looking to buy their competition. With such a tight market it’s no wonder discussions about these rumors quickly focus on what’s to become of the office and retail space.