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Green Building in Crisis? Bear Stearns Meltdown May Drown Beer Belly Building

March 18, 2008  |  from greenbuildingsNYC

Late yesterday, Crain’s reported that JPMorgan Chase will move its investment banking operations into the former offices of Bear Stearns on Madison Avenue at 47th Street in Midtown, which JPMorgan purchased on Monday in the aftermath of Bear’s meltdown last week. The decision places the proposed LEED Platinum Beer Belly Building project at 5 World Trade Center in jeopardy- if not completely shelving it- though according to a spokesman the bank is still considering its options in connection with the site. Crain’s also reports that JPMorgan will continue negotiating with the Port Authority about building at 5 WTC, but the same spokesman “couldn’t say what might be built . . . or when a decision would be reached.” The project had been delayed due to complications in razing the former Deutsche Bank Building, but as of mid-January appeared to be moving forward in time for JPMorgan to take control of the site by this coming September.

Designed by Kohn Pedersen Fox, the 42-story, 1.3 million-square-foot tower’s “beer belly” was to begin on the twelfth floor as seven cantilevered trading floors of approximately 50,000 square feet each. The cantilevered space was necessary to accommodate the St. Nicholas Greek Orthodox Church underneath, as well as reduce shadows on the Ground Zero Memorial by moving the large trading floors up off the ground level. JPMorgan had paid the Port Authority $300 million to lease the land and build the tower, $10 million of which was to go to St. Nicholas and the World Trade Center Memorial Foundation. The project itself was expected to cost upwards of $1 billion with JPMorgan’s $290 million ground lease to end in 2100. KPF had also been refining its design after receiving strong criticism (though not here at gbNYC) upon unveiling the initial renderings last summer.

As the credit crisis continues to unfold, it’s clear that there will be implications both locally and, eventually, nationally for sustainable building. Indeed, with 1.5 million square feet of office space about to come back on the New York City market (also according to Crain’s) from financial services firms looking to shed space, the impact on a number of local green projects that are targeting such tenants could be significant. (Take, for example, Macklowe’s 510 Madison Avenue, which is specifically aiming for high-end financial services tenants capable of occupying an entire floor of the building’s column-free plates.)

JPMorgan’s announcement comes right on the heels of last week’s remarks from Larry Silverstein about the significant progress that’s been made to date at the World Trade Center site. Bear Stearns’ collapse was unanticipated, and it’s unlikely that JPMorgan seemingly withdrawing from the site will be fatal to Mr. Silverstein’s overall development scheme. Nevertheless, it’s quite possible that the Beer Belly Building might not be the only local green project that goes by the wayside thanks to market turbulence. One potential silver lining- if any- to the credit crisis in the green context could be the increased emphasis that investors will be forced to place on building performance when evaluating potential projects. Nevertheless, 2008 is shaping up to be an extremely bumpy ride for green real estate here in New York City, where the green landscape is, incredibly, shifting almost daily thanks to Wall Street volatility.

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Filed: Green-Construction