Fate of ChemCourt atrium up in the air.

Chemical Bank is moving out of 277 Park Avenue in a legal huff and taking its street-wise statue with it across the street to 270 Park. That's a building that its merger partner, Manufacturer's Hanover, owns and that Chemical realized would be the best place to situate its own personnel.

The company had been in the middle of a headquarters search when the two banking institutions merged Dec. 31, 1991.

Since that time, Chemical Bank executives charge, 277 Park owner Stanley Stahl has refused to sign papers that would permit the bank to fulfill what it believes are its exit requirements, while Stahl is insisting the bank remove its spectacular lobby atrium and asbestos that was not removed when a fire retardant was used, claiming the building no longer complies with city building codes.

In the past several months, court documents have flown between the parties. Last week, Chemical spokesperson Ken Herz said, "Mr. Stahl served us with an arbitration demand. We moved to stay the arbitration. We believe the limited exit work was waived since we haven't been able to do it," added Herz. "He sought an injunction ordering us not to do it, so we feel our requirement to do that has been waived."

"A trading floor is an example of what is going on here," Herz said. "Stahl is alleging that we should dismantle it and has told prospective tenants that they can use it."

The reality, some executives believe, is that the atrium and trading floors were leasing points for the building and Stahl was only too afraid that Chemical would insist on removing them. Other executives, however, said none of the large tenants liked the lobby, which was installed at Chemical's request and features a fountain and greenhouse. The economics of carrying the atrium are also staggering and the space could be reused and rented for a bank branch, restaurant or other upscale retail. One item that belongs to Chemical is the J. Seward Johnson statue "Taxi," portraying a harried executive trying to hail a cab. That, Herz said, is being moved across the street.

The 51-floor building designed by Emery Roth & Sons comprises 1.76 million square feet and was constructed in 1962. It's other biggest tenant, Ernst & Young, has 17 floors and is in the process of moving out to 787 Seventh Avenue, the Equitable Center.

Franklin C. Speyer, a senior director of Cushman & Wakefield, said they have brought tenants to 277 Park, which is being promoted without the $10 million atrium. "The building has an excellent location and with the refurbishment of operating systems and removal of other systems it could be a first rate facility," he said.

Among tenants said to be in discussions with Stahl and his agents at Abrams Benisch Riker are Sumitomo Corp.; Bear Stearns & Co; Donaldson Lufkin Jenrette and S.G. Warburg.

"I'm sure he'll accommodate all comers," said Speyer.

He predicts Stahl will achieve rents in the mid- to high $40s. It won't be the most expensive space in the city either, noted Speyer, who said there is 100,000 square feet at the Met Life/200 Park building that's even more expensive.

This winter, Stahl moved to evict the banking institution before the expiration of its lease in July, but did not succeed.

Neither Stahl, his representatives, nor Abrams Benisch Riker would comment on the issues.

--Lois Weiss