It's safe to say Goldman Sachs just isn't cut out for the commercial real estate business.   And it's probable the firm never intended to become a landlord back in 2000, when it executed Plan A by leasing a 26-floor office building with 600,000 sf on Water Street in lower Manhattan.

So much for doing God's work - it doesn't necessarily mean that Goldman would benefit from "devine guidance" in its real estate ventures.

Shortly after signing the lease, the firm decided not to move in and proceeded to Plan B - finding tenants to sublease.  That plan took way too long to kick into motion and, by 2009, most of the building was still empty.  But tenants began arriving in 2009 and by mid-2011, the building was just about rented out - all but one floor.  Bill  Clinton's Foundation recently took space, as did AT&T.  Unfortunately, the current rent roll doesn't cover Goldman's annual rent of $21 million, which has 9 years left on the lease. What Was Goldman Thinking? According to NYU Professor Longua, "Financial firms thought there was very little risk in signing an additional lease because rents were rising and, worst case, you could always lease it to someone else for more money next year."  But then there was the 9/11 terrorist attack on the World Trade Center in 2001, which dampened interest in taking downtown office rentals. Financially speaking, the firm has and will continue to lose money on the lease - which is a shame, given its job cuts plans.  And, there are the tens of millions that Goldman spent on infrastructure renovations  - e.g., they replaced the elevators, installed new electrical and fire safety systems, and loaded up on new bathrooms. Going Forward. Goldman has been offering some of the best deals in lower Manhattan, according to real estate agents - including generous incentives.  Just to give you an idea, President Clinton's Foundation is leasing 25,000 sf on the 18th floor of 77 Water Street --- and he's paying less now than he did for his previous uptown office space in Harlem. Guess that's why the Wall Street Journal refers to 77 Water as "Goldman's White Elephant."   And we always thought Goldman preferred the "Republican Donkey."  Live and learn.   [WSJournal, 10/5/11]