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Morgan Stanley Group Inc.'s $176 million winning bid last week for the bankrupt office tower at 1585 Broadway announced to the world that Manhattan property values are on the rebound.
But more importantly, Morgan Stanley's decision to move into the 42-story tower is the most dramatic sign yet that the securities industry is finally beginning to expand.
For two years, Wall Street profits have soared but securities firms have added only a few employees and taken virtually no additional space. Now that is starting to change. With employment slowly gaining, appetite for space is growing among brokerages and investment banks.
Morgan's employment already has grown to 4,590 workers from 4,127 in 1991 and its expansion plans "played a very important part in our decision" to bid on 1585 Broadway, says James M. Allwin, president of Morgan Stanley Realty Inc. "It is clear that a number of our businesses are rapidly increasing again."
Morgan is not alone. Goldman, Sachs & Co. is negotiating a lease for another 150,000 square feet at One New York Plaza. Both Lazard Freres & Co. add Donaldson, Lufkin & Jenrette Securities Corp. are planning to add space when they sign new leases later this year.
"Everyone is beginning to expand a little bit," says Rodger Parker, manager of administrative services for Prudential Securities Inc., which increased its space by 10% earlier this year when it signed new leases for 1.6 million square feet at One New York Plaza and Seaport Plaza.
The expansion today is much slower and deliberate than during the 1980s when Wall Street added close to 100,000 jobs and gobbled up office space as fast as it was built. Many firms, like Merrill Lynch & Co. and Salomon Brothers Inc., are still stuck...