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Spokane, Washington  Est. May 19, 1883

Trump’s Folly? Real Estate Developerswary Of Proposed Tower

Robert Burgess Bloomberg Business News

Developer Donald Trump’s plan to build the world’s tallest building at the southern tip of Manhattan to house the New York Stock Exchange was met with skepticism by real estate officials, who noted the area still suffers from a glut of space.

“Clearly, the market has too much available space as it is,” said Howard Grufferman, manager of commercial broker Julien J. Studley Inc.’s downtown office. “It’s a little premature to be doing out of the ground construction.”

The downtown Manhattan office vacancy rate has risen steadily since the early 1980s and at the end of March averaged 21.3 percent, compared with 11.2 percent for the midtown area, according to CB Commercial Real Estate Group.

Downtown has suffered as big securities firms such as Paine Webber Group Inc. and Morgan Stanley Group Inc. moved to the midtown market and midsized companies fled to cheaper and more modern offices in the suburbs.

Even so, Trump told the New York Post that if the NYSE does decide to move to another location, he would build it a new home just a few blocks away from the exchange’s current digs.

The NYSE said yesterday it was considering a move from the 18 Broad St. address it has occupied for 93 years to a new, larger space in lower Manhattan.

A Trump spokeswoman said the plan is still in its early stages and no final decisions or proposals have been made.

The plan calls for a 140-story building containing 3.5 million square feet of space, which is more than half the size of Rockefeller Center. A separate, 250,000-square-foot building would be built next to the tower for the NYSE’s trading floors.

At 1,792 feet tall - to commemorate the exchange’s founding in 1792 - the building would be about 415 feet higher than the World Trade Center. The world’s tallest building is the 1,534-foot oriental Pearl TV Tower in Shanghai, China.

Building the tower might be the easy part because Trump would still have to find tenants to fill it. Most of the leasing activity in downtown during the last year has come from young companies moving into cheaper and older space.

“This would be a huge project,” said John Bralower, president of New York-based real estate investment bank Sonnenblick-Goldman Co. “I’m skeptical the market could support a building that size.”

A more likely scenario, said Grufferman, would be for the exchange to move into an existing building, such as 55 Water Street, which almost became the new home of the New York Mercantile Exchange when that exchange was mulling a move in 1994.

“There is the ability to create a block of space to house the exchange,” Grufferman said.

A third option would be for the NYSE to do nothing.

In 1992, the exchange and rival American Stock Exchange considered a proposal by J.P. Morgan & Co. to move into a site to be built adjacent to the Big Board’s current location. That proposal was eventually shelved.

To be sure, the plan shows how far Trump has come from his financial troubles of the early 1990s. He is now once again one of the most active participants in the New York real estate market.

Last year, Trump was part of an Asian investor group that bought the Empire State Building. He was also part of an investor group that bought 40 Wall Street, a nearly vacant 70-story office building across from the NYSE.