(Bloomberg) — It took almost a decade and a half for MetLife Inc. to determine that Manhattan’s MetLife Building was where it belonged.
The biggest U.S. life insurer said Wednesday it will consolidate its New York operations into 200 Park Ave., which gained fame in the 1960s as the Pan Am Building before Pan American World Airways Inc. went bankrupt about 30 years later. MetLife bought the building in 1980, then replaced the Pan Am sign at the top with its own in 1993 after the airline’s demise.
The company had offices there and locations including 1 Madison Ave. in 2001, when Mayor Rudy Giuliani persuaded the company to move more than 900 jobs from Manhattan to a onetime Rolls-Royce factory just across the Queensboro Bridge in Long Island City, in an incentive-laden effort to develop a satellite business district there. That was followed about four years later by the sale of the MetLife Building to a group led by Tishman Speyer, and a decision to move most of the Queens staff to another Midtown tower a year later.
By the time MetLife decided to consolidate at the MetLife Building, it had only about 110,000 square feet (10,200 square meters) in the 3 million-square-foot tower, housing its executive offices and boardroom.
“The decision to go there in the first place was probably a very good decision,” said Barry Gosin, chief executive officer at Newmark Grubb Knight Frank, a New York-based real estate brokerage. “Sometimes we go in a complete 360. This is a classic example of a 360” degree turn “back to when that decision was made.”
The MetLife tower sits astride Grand Central Terminal, giving it unbeatable transportation connections, Gosin said.
“You can get everywhere from that location,” he said.
MetLife signed a 12-year lease in a deal that will give it about 530,000 square feet, mostly at the base of the 58-story tower. Chief Executive Officer Steven Kandarian, who has been closing locations to cut costs, will be consolidating employees into one property from four. The moves are to be completed by 2017, the insurer said.
Among the properties it will leave is 1095 Avenue of the Americas, where it has about 492,000 square feet, according to data from CoStar Group Inc., a Washington-based research firm that tracks office leasing. That building was sold two months ago to a partnership led by Ivanhoe Cambridge Inc., the real estate arm of Canadian pension fund Caisse de Depot et Placement du Quebec, for $2.2 billion.
MetLife, along with Verizon Communications Inc., are currently the main tenants at the 1.2 million-square-foot tower, also known as 3 Bryant Park.
MetLife gave back $5 million of the $26.4 million of city incentives it received to move to Queens when it leased space at 1095 Avenue of the Americas in 2006.
The move from Long Island City was “important” to MetLife’s stature as a major life insurancecompany, John Calagna, a spokesman for the insurer, said at the time.
Calagna on Wednesday declined to discuss the implications of MetLife’s return to the tower it once owned. When the company bought the tower in 1980, it was purely as an investment, and MetLife had no offices there at the time, Calagna said.
MetLife has three leases for space in the Bryant Park building, all expiring in 2029, giving it the option of subleasing those offices or negotiating a termination with the new owners. Calagna said the company intends to sublease its space at 3 Bryant and in Long Island City.
Sebastien Theberge, an Ivanhoe spokesman, said in an e-mail that MetLife remains under a long-term lease at the property. Ivanhoe doesn’t comment in public on lease details, he said. Bud Perrone, a Tishman Speyer spokesman, also declined to comment.
If MetLife’s Bryant Park space becomes available, it could attract a premium rent, said Chris Peckholdt, assistant director of Landauer Valuation & Advisory, an appraisal division of Newmark, who recently conducted a study of office space surrounding the park.
Office space in the building would lease for roughly $100 a square foot, about 12 percent higher than similar space “near the park but not on the park,” he said in an interview.
The MetLife Building space is “probably cost-effective compared to the other options out there,” said Stephen Siegel, global brokerage chairman at CBRE Group Inc., who has represented MetLife in the past. “And their name’s on the roof, so it kind of makes a lot of sense.”
–With assistance from Doni Bloomfield in New York.