JPMorgan Chase & Co. agreed to build a skyscraper near Ground Zero for its investment-banking headquarters, becoming the second Wall Street firm to commit to moving into the area devastated by the terror attacks of Sept. 11.

The third-largest U.S. bank will occupy a tower with about 40 stories, 1.3 million square feet and six trading floors, New York Governor Eliot Spitzer and JPMorgan Chief Executive Officer Jamie Dimon said today at a news conference with the Port Authority of New York and New Jersey. The bank will invest about $2 billion in the project, which may be completed by 2012.

JPMorgan will become the first private-sector company to take space in the Ground Zero reconstruction zone and will get about $200 million in government benefits. The deal will bolster the recovery of the financial district as it rebounds from Sept. 11 and may lure more companies to the site where the twin towers once stood.

"There couldn't be a more affirmative statement for New York as a financial capital," Spitzer said.

The JPMorgan building will be constructed at Cedar and Greenwich Streets at the site of the former Deutsche Bank AG building, which was damaged on Sept. 11 and is being demolished. The bank will bring 7,000 investment banking employees to lower Manhattan from midtown. It will retain its corporate headquarters at 270 Park Ave. and renovate it.

"We're proud of going back home," said Dimon, who pointed out the bank traces its roots to lower Manhattan back more than 200 years.

JPMorgan will pay $290 million for the site and have a 92- year lease that begins July 2008. The bank's economic development incentives "will be north of" $200 million, the governor said.

Except for $20 million of benefits when the company reaches full employment downtown, Spitzer said the incentives were "off the shelf," available to most companies developing downtown.

A commercial real estate tax exemption and sales tax incentives add up to about $160 million, Spitzer said. JPMorgan is also entitled to a $5 a square-foot rebate for some space.

The $20 million discretionary incentive drew a rebuke from Bettina Damiani, director of Good Jobs New York, a labor-backed non-profit group.

"JPMorgan Chase is eligible for a variety of tax breaks," Damiani said. "To ladle on more subsidies on top of that is egregious."

JPMorgan's move comes as Goldman Sachs Group Inc. is building its headquarters adjacent to the former trade center site, which is controlled by the Port Authority.

J.P. Morgan & Co. moved to midtown from Wall Street in 2001 when the firm was acquired by Chase Manhattan Corp. Dimon, 51, became JPMorgan's CEO earlier this year. It's building in a reconstruction zone that consists of the 16-acre World Trade Center site bounded by Church, Liberty, Vesey and West Streets, plus two acres just south acquired by the Lower Manhattan Development Corp. Goldman's project isn't in that zone.

The plan calls for six trading floors, each with up to 60,000 square feet, the company said. Community groups have criticized the floors because they will extend beyond the site's 32,000 square-foot footprint and overhang a new park and a rebuilt St. Nicholas Greek Orthodox Church.

JPMorgan will pay $10 million to the church, Spitzer said. The church "is still waiting for the official terms" of the agreement, said church spokesman Peter Drakoulias.

The skyscraper will be designed by A. Eugene Kohn of Kohn Pedersen Fox, a New York-based architecture firm, people familiar with the matter said.

Securities firms are seeking offices with modern trading floors as a growing portion of their revenue comes from buying and selling stocks, bonds, currencies and commodities.

Goldman, the world's most profitable securities firm, is building a $2.5 billion headquarters with about 500,000 square feet for trading across West Street, northwest of the trade center site. Goldman's 43-story tower is scheduled to open in 2009.

Goldman made 60 percent of its revenue, or $22.7 billion, from trading in fiscal 2006. JPMorgan took in $6.3 billion, nearly a third of its $19.7 billion in first-quarter revenue, from investment banking and trading.

The $2.5 billion Goldman building is being funded with $1.6 billion in tax-exempt Liberty Bonds, intended to entice big employers to stay in downtown Manhattan after Sept. 11.

The Liberty Bonds could save Goldman at least $100 million, said Doug Turetsky of the city's Independent Budget Office. Goldman's deal also includes up to $115 million of city and state tax breaks.

Demand for office space in lower Manhattan is surging as the area recovers from the attacks. The vacancy rate fell 36 percent to 7.6 percent at the end of the first quarter from a year ago, according to Grubb & Ellis Co., a brokerage firm.

City, state and federal agencies, including U.S. Customs and Border Protection, have agreed to lease space in Freedom Tower, the 1,776-foot-tall skyscraper to be built at the site by 2012, and at 4 World Trade Center, a smaller tower to be finished in 2011.

Developer Larry Silverstein, who holds the lease on the World Trade Center site and is building four other office towers there, said the JPMorgan deal will help revitalize downtown Manhattan.

The agreement "proves again that downtown has re-emerged as the financial capital of the world," he said.

Community Board 1, a group representing downtown residents, opposes the plan to cantilever the trading floors over the park because it would cast a shadow on the area.

"We don't need another concrete plaza down here that's covered in shadow," said Catherine McVay Hughes, chairwoman of the board's World Trade Center redevelopment committee.

The overhang won't be oppressive, Spitzer said. It will create "an all-weather park beneath it. There will be an opportunity to play chess or play ball there even when it's pouring."

--With reporting by Bob Ivry in New York and Daniel Taub in Los Angeles.

By David M. Levitt and Joseph N. DiStefano
Bloomberg News
Published June 14, 2007, 4:15 PM CDT
Copyright © 2007, Chicago Tribune