NEW YORK CITY-Sources have confirmed ongoing rumors–fannedyesterday by newspaper reports–that financial-services firm MerrillLynch is inches from a deal that would render it the new anchor ofa proposed 2.5-million-sf Midtown office tower.The structure would rise on the footprint of the PennsylvaniaHotel. Needless to say, a move of this size–valued as high as $4billion–from Lower to Midtown Manhattan doesn't leave Downtown'sadvocates smiling.

No one involved in the deal, not Vornado, Merrill or brokerJones Lang LaSalle, would return calls for comment, but a sourcefamiliar with the proceedings did confirm that a relocationannouncement was close at hand.

In fact, there's a good chance, he says, that definitive newswould be in hand by now, were it not for the matter of Merrill's$2.3-billion net loss in Q3. News of a project this size on theheels of such massive loss would be viewed as less than prudent.“They want some time between,” the two announcements.