Financial Firms Expand Their Footprint In Manhattan Office Space
In a move seen largely as precursor to Trump’s relaxing of banking restrictions, financial companies are preparing for a borrowing bonanza with low taxes.
Financial firms got the fright of their lives in 2008 when the real estate market crashed. The words “loan” and “borrow” were suddenly viewed along the same lines as “devil” and “worship.”
Since 2008, banks and insurance companies contracted their footprint in Manhattan’s offices from 32 percent to 25 percent. Now, with the new Trump administration signaling a possible return to the pre-2008 bacchanalian borrowing, with an easing of regulations and the cutting of corporate taxes, firms are again expanding their imprint in the glassy towers in the sky. Prepare for the liftoff.
Asset-manager AllianceBernstein LP and HSBC, a unit of global banking giant HSBC Holding PLC and others like them, have, according to the Wall Street Journal, been checking out properties like rock stars a Victoria Secret show.
Anticipating a boon, banks have been splashing the cash with much of it going to (30) Hudson Yards on Manhattan’s far West Side, where Investment firm KKR & Co. and Wells Fargo Securities already have committed to moving to. BlackRock Inc. said it was taking 850,000 square feet at 50 Hudson Yards, a 2.9-million-square-foot tower expected to open in 2022.
Moving a major financial services company is a bit like turning around an oil tanker. It’s not the kind of thing that can be done in a weekend with a U-Haul and a few friends. In fact, preparations can start six or seven years in advance. The lease on AllianceBernstein’s 600,000-square-foot office at 1345 Sixth Avenue runs through 2024, but the company already has started looking at different locations, as spokesman Jonathan Freedman told the the WSJ. The ubiquitous Hudson Yards is in the picture, as is 4 Times Square (the H&M building) and 1271 Sixth Avenue.
HSBC got its mojo mowed after the financial crash with a fine purported to be around $1.5 billion for shady sub prime practices. It’s preparing to soar again as it looks for space away from its current location at 452 Fifth Ave, where its lease expires in 2020.
An HSBC spokesman told the WSJ, “We regularly review our real estate portfolio to ensure it remains appropriate for the future needs of the business.”
The last decade has seen a changing of DNA for much of Manhattan—as tech companies, startups, advertising and media firms brought the sexy back to office rentals. Innovative spaces and concepts were funded by Wall Street and Silicon Valley. Conversely, chunks of the banking sector moved either abroad or to other states—like J.P. Morgan Chase, which decided to relocate 2,150 jobs from New York City to Jersey City in exchange for tax incentives. Now, with contemporary offices like 7 Bryant Park being built or remodeled around the city to cater to a younger workforce, finance square-footage is once again on brokers’ and developers’ minds.
Hudson Yards, developed by Related Cos and Oxford Properties Group, currently has the gloss and glam that’s attracting companies like bees to nectar.
“It is very difficult to renovate around existing tenancy,” Jay Cross, president of Related Hudson Yards told WSJ, “So it’s easier to say, I’m going to shift both neighborhood and office environment.”
And why not?