NYSE's New York City Footprint May Shrink

The Wall Street Journal

The New York Stock Exchange, an institution that has long been at the heart of downtown Manhattan's identity, is considering a reduction of its presence there as its new parent company cuts jobs and moves positions out of the city.

Ramsay de Give for The Wall Street Journal The New York Stock Exchange currently has a lease for 381,000 square feet at 20 Broad St.

The Atlanta-based IntercontinentalExchange Group Inc., which acquired the exchange last year for more than $8 billion, has been trying to sell some of the NYSE's businesses and is moving some of its operations to Atlanta. The NYSE still employs hundreds of workers in its downtown complex that includes its landmark headquarters at 11 Wall St. and space it leases in the building next door at 20 Broad St.

Now the parent company, known as ICE, is trying to decide whether to keep the office space in 20 Broad when that lease expires in 2016, according to a person familiar with the matter. Another option under consideration is to reduce the amount of space it leases there. The NYSE has a lease for 381,000 square feet at 20 Broad, according to an ICE regulatory filing. A spokeswoman for ICE declined to comment.

ICE has no plans to reduce the NYSE's presence at 11 Wall St., where its sprawling trading floors operate, the person familiar with the matter said.

Still, the possibility that the 221-year-old exchange, which traces its roots to a gathering of stockbrokers in May 1792, could significantly shrink its space at what once was the heart of capitalism highlights the changes technology is making in global stock trading—and the impact of those changes on New York's downtown business district.

ICE's plans also could pose a potential headache for Vornado Realty Trust, which controls the 27-story tower at 20 Broad St. If the space is vacated, Vornado would have to fill it just as millions of square feet of new space are being delivered at the rebuilt World Trade Center complex. A Vornado spokesman declined to comment.

For most of the stock exchange's history, trading took place on the floor of the "Big Board," requiring member firms and related businesses to be situated nearby. But as trading volume soared and technology improved, a growing volume of trading moved to electronic exchanges and private trading pools, diminishing the relevance of the exchange floor.

Today, only a fraction of stock trades are executed on the floor. The business has become so digitized that "physical proximity is no longer necessary," said John Wheeler, managing director at Jones Lang LaSalle Inc., who oversees the firm's lower Manhattan operations.

Downtown office landlords first felt the impact as major securities firms moved to Midtown and even out of New York. More recently, stock exchanges themselves have shrunk or vanished. The headquarters of the American Stock Exchange, which merged with NYSE in 2008, was sold in 2011 to developers Allan Fried and Michael Steinhardt, who are planning to convert it into stores and a hotel.

New York government leaders, concerned about the city maintaining its central role in global finance, have considered major investments to maintain NYSE's pre-eminence. In the late 1990s, the exchange had advanced talks with the state and city about a $1 billion plan to construct a 50-story tower with state-of-the-art trading floors.

Those talks broke down in 2002 as questions rose about how to finance the new building in a more security-conscious environment. Since then, the Big Board's share of U.S. stock trading has dropped dramatically.

ICE clearly puts a high value on 11 Wall St., the iconic headquarters building that opened in 1903. The parent company listed the value of all its property and equipment as $891 million as of December 2013, compared with $144 million the year earlier.

But ICE also is interested in cutting costs. The company is selling some of its businesses, including its NYSE Technologies unit, and is expected to put its European equities exchange Euronext up for an initial public offering this year. ICE executives said during a conference call this month that they expect to achieve 90% of its planned $500 million in cost cuts and synergies related to the NYSE acquisition by the end of 2015.

The NYSE lease with Vornado represents more than 81% of the space in 20 Broad St. Space in the tower also is leased to other tenants.

Vornado took control of the building in 1997 to play a role in the Big Board's expansion plans, according to a Wall Street Journal article at the time.

Last year, the office vacancy rate downtown increased to 12.2%, up from 8.8% at the end of 2012, according to Cushman & Wakefield Inc. The increase was largely due to the opening of 4 World Trade Center. Big financial-services firms also are continuing to contract.

On the bright side, brokers also point to the migration of companies, especially from the media sector, from Midtown to downtown. Publisher HarperCollins signed a lease for 185,000 square feet at 195 Broadway last year. And advertising company Group M signed a lease to occupy 516,000 square feet in 3 World Trade Center.

Write to Bradley Hope at Bradley.Hope@wsj.com and Keiko Morris at Keiko.Morris@wsj.com



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