The dispersal of Wall Street gathered pace on Monday with word that Morgan Stanley and Goldman Sachs will move significant operations out of New York City.
Morgan Stanley reached a preliminary agreement to buy the former Texaco headquarters in the suburbs north of New York City, while Goldman is planning to shift its equities business across the Hudson River to New Jersey.
The moves reflect the new banking landscape that has taken shape following the September 11 attack against the World Trade Center in the heart of the lower Manhattan financial district.
The attack exposed a critical flaw in the contingency plans of many leading financial companies. Too many of their operations were located on the same telecommunications and power grids, leaving no excess capacity to provide a service in the event of an emergency.
For security reasons, banks are now looking to disperse operations, moving away from the once-fashionable 'campus' model, in which offices were clustered in a single area.
At the same time, the weak demand for investment banking services is increasing the pressure to move employees out of Manhattan's high-rent districts to cheaper locales nearby.
'There are two parts of this,' said Amy Butte, securities industry analyst at Bear Stearns. 'One is cost and two is reducing the risk to 'campus'. If you went back a year ago, campuses were in. Today, campuses are out.'
Morgan Stanley said it had reached a preliminary agreement with ChevronTexaco to buy the former Texaco headquarters in Westchester County, a mostly residential area in New York City's northern suburbs. The building is 27 miles away from its existing headquarters in Manhattan's Times Square district.
The bank had been the biggest tenant in the WTC, leasing 1.2m square feet of office space, mostly for its brokerage operations.
At the time of the attack, Morgan Stanley also had been close to occupying a new trophy tower that it had built around the corner from its headquarters in Times Square.
However, after September 11, Morgan Stanley decided to sell its new building - at 745 Seventh Avenue - to Lehman Brothers, which itself had been chased from its headquarters in the World Financial Center, next to the WTC.
The old Texaco headquarters building is not as big as the Seventh Avenue tower, but it will make up for some of the space Morgan Stanley shed with the sale.
Meanwhile, Goldman Sachs hopes to concentrate its equities business in a building it is putting up in Jersey City, New Jersey, directly across the Hudson River from the Wall Street area. The planned shift was first reported by Bloomberg News.
Construction on the Jersey City facility began in 1999 and is scheduled to be completed in 2004. Goldman Sachs said the company would remain headquartered in lower Manhattan.
In its announcement, Morgan Stanley also said it 'expects the vast majority of its 14,000 workers in New York City will remain in the city'.
Publisher: I-Net Bridge Financial Times
Source: I-Net Bridge Financial Times
The dispersal of Wall Street gathered pace on Monday with word that Morgan Stanley and Goldman Sachs will move significant operations out of New York City.
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