NEW YORK CITY-Sources have confirmed ongoing rumors–fanned yesterday by newspaper reports–that financial-services firm Merrill Lynch is inches from a deal that would render it the new anchor of a proposed 2.5-million-sf Midtown office tower. The structure would rise on the footprint of the Pennsylvania Hotel. Needless to say, a move of this size–valued as high as $4 billion–from Lower to Midtown Manhattan doesn't leave Downtown's advocates smiling.

No one involved in the deal, not Vornado, Merrill or broker Jones Lang LaSalle, would return calls for comment, but a source familiar with the proceedings did confirm that a relocation announcement was close at hand.

In fact, there's a good chance, he says, that definitive news would be in hand by now, were it not for the matter of Merrill's $2.3-billion net loss in Q3. News of a project this size on the heels of such massive loss would be viewed as less than prudent. “They want some time between,” the two announcements.