Lehman to buy Times Square building from Morgan Stanley

NEW YORK — Morgan Stanley Dean Witter is selling its new 1 million-square- foot office near Times Square to Lehman Bros. Holdings, making it the first major securities firm since the Sept. 11 attacks to give up a large chunk of Manhattan real estate.

The 32-story tower, one block from Morgan Stanley's main headquarters, has been under construction since 1999 and is expected to begin housing some traders and salespeople in the next few months. Terms of the transaction were not disclosed.

The sale provides Lehman Bros. badly needed space after the attacks destroyed the World Trade Center, displacing nearly 6,000 of its workers. Its global headquarters were at the nearby World Financial Center, which was evacuated, forcing the relocation of workers to backup locations in Manhattan and New Jersey.

The deal also signals a possible exodus for a portion of Morgan Stanley's operations. The firm, the largest single employer at the Trade Center with 3,700 workers in the complex, recently acquired space on Third Avenue but is also looking at sites in suburban Westchester County, N.Y., and in New Jersey and Connecticut.

"Morgan Stanley will continue to have a major presence in New York City and will be better positioned from a business continuity standpoint," Chairman Philip Purcell said.

In particular, Morgan Stanley executives worried about concentrating too many of its workers in one area. It houses many of its 62,000 employees in several buildings in the Times Square area, and wanted to disperse some of them after the attacks, according to people familiar with the matter.

Spokesman Bret Gallaway said in terms of future locations, the firm was "considering all options for our short-term and long-term needs."

Lehman Bros. said the purchase will allow it to bring its workers from several satellite locations together, allowing the firm to operate "quickly and efficiently."

The securities firm said it remained committed to returning to downtown Manhattan.