While discussing the suburban payroll tax revolt last night, I briefly alluded to USB’s looming decision to move back to Manhattan. I went to spend a little bit more on that story tonight as it highlights the importance of both fast transit for the suburbs and the allure of being close to it all.
The story goes a little bit something like this: In 1996, UBS garnered headlines when it became one of the first major financial institutions to move its headquarters out to Stamford, Connecticut. Thanks to some generous tax breaks by the state as well as the promise of subsidized office construction, the company parked its trading floor, the largest in the world, nearby the Stamford Metro-North stop.
Now, they want to move back. And why? Because they’re just too far away from where people live. Charles V. Bagli has more and his writing is very telling:
Now, though, UBS is having buyer’s remorse. It turns out that a suburban location has become a liability in recruiting the best and brightest young bankers, who want to live in Manhattan or Brooklyn, not in Stamford, Conn., which is about 35 miles northeast of Midtown. The firm has also discovered that it would be better to be closer to major clients in the city.
As a result, UBS is seriously considering a reverse migration that would bring its investment banking division and up to 2,000 bankers and traders back to Wall Street and a new skyscraper at the rebuilt World Trade Center, according to real estate executives and city officials.
“They just can’t hire the bankers and traders they need,” said one landlord who has spoken with UBS but requested anonymity so as not to alienate a potential tenant.
A piece in today’s Times delves even further into the employee reaction to this news. “I live in Manhattan, so I do the reverse commute,” Jon Gimpel, a UBS employe, said. “The train ride is like 45 minutes, then I ride my bike through Central Park to get home. If UBS moves back to Manhattan, I’ll save $300 a month in train fare and major aggravation. Awesome.”
And that’s the truth of it. Right now, people — especially younger people — want to be close to the city. They want to be able to commute to work with one fare card or walk or bike. They don’t the aggravation of a long train ride to and from work every day. They want, in a nutshell, the pinnacle of transit-oriented development.
Now don’t get me wrong; for some people, the Connecticut suburbs are a few place to live. One of my friends found himself working for a financial institution up there around four or five years ago, and he made it work. But the nightlife was very limited, and the restaurants varied from overpriced to mediocre. And transit-oriented development can work in the suburbs if the jobs draw from the resident base. Here, though, the jobs drew from Manhattan, and that doesn’t work.
I doubt UBS’ actions are going to signal some grand trend of big companies repatrioting to urban areas, but it’s worth dwelling on development priorities. The ‘burbs might be willing to grant the tax break, but the people want an urban life, transit and all. Once-an-hour commuter rail just doesn’t cut it.
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Much of what keeps non-essential firms out to begin with is probably regulatory. New York City is not kind to business, even sustainable service ones. And I don’t mean to say it’s high costs themselves that keep people away; it’s the actual difficulty in getting permits, expanding, hiring/firing, and, in the case of any land-intensive industry, dealing with zoning and land use regulations. I don’t think we should roll over and let them do whatever they want, like the Texas legislature, but our lack of engagement isn’t helping us. Even taxes are probably fairly secondary to that stuff.
Deal with problems like that and our transportation system probably will start attracting larger firms who want to choose to be here.
They must be having serious retention issues to be contemplating this. I think the nearness to clients is a bit superfluous. Really, who first wants to commute for anywhere between 30 and 90 minutes just to get to Grand Central and then have to hop on another train for an hour, AND at a higher fare. Those MNR New Haven line reverse trains are peak fare in the morning.
Not so much a retention issue as a recruiting issue. What young single hotshot banker or trader wouldn’t want to spend their downtime impressing pretty women in the Meatpacking or other trendy party district in Manhattan?
This is not as singular an event as one might think, much though Mr. Kabak’s caution about any mass reverse migration is warranted. Look across the Hudson Ocean to New Jersey.
In recent years, a major sports franchise migrated from the Meadowlands to Newark — successfully — and a major U.S. subsidiary of a Japanese-based company plans also to move its headquarters from Secaucus — arguably “suburban” in nature despite its close proximity to urban areas — to Newark. Are they getting government aid to do so? Sure — but if cities had no advantages at all, no amount of aid would generate such moves. The “scare/dare” days of the late 20th century are in the past.
Still in play is the planned move by the Nets from the swamp to Brooklyn; maybe it’ll happen, maybe it won’t. OK, don’t brace for an avalanche of reversals. But the advantages of urban organization, including rail and public transit within that organization, appear to be reasserting themselves, despite real obstacles as cited by others here.
The Devils most certainly do not draw in Newark. That move has most certainly not worked out, and that’s after Newark built thenm a stadium for free.
By the way, if Newark wants to build me a 5,000 square foot house for free, I’ll move there too. I’ll even pose for smiling photos in front of it for their “new urbanist” brochure.
It is interesting that this comes not long after Prudential decided to move to downtown Newark. The common factor here is that these companies are all trying to play the local governments for the biggest tax breaks. I bet UBS knows they can get sweet deals from the city and state to move into one of the proposed world trade center buildings, and they can convince the architects and developers to include massive trading floors in whichever building they pick.
On the other hand, I believe one of the main purposes of any efficient transportation network is to match a certain use with the most appropriate location. In the long run, it made a whole lot more sense for the old factories to leave NYC for cheap land in New Jersey than for them to stay in the city. Are offices all that different? One of the major points of moving to Stamford is that they needed to build a massive trading floor, which is a legitimate reason. That is much more difficult and expensive to do in Manhattan. Why bother? This could easily be read as a failure of the region to come up with an effective, inexpensive regional transportation network. Ideally, it wouldn’t be a hassle at all for someone to live in the city and work in Connecticut. That is the underlying point of regional rail, similar to what Alon Levy proposed on the Transport Politic a while back. I should be able to easily catch a one seat ride in Brooklyn using my “oyster card” and be in Stamford 45 minutes later. It has become obvious in recent years that one of the biggest draws of Manhattan is as a place to live. It sounds more appealing to me to come home to the excitement of the city and spend your days in the boring suburbs, instead of the opposite. Who likes emerging from Penn Station at 8:30 in the morning into the throngs of cars and humanity on 7th Ave?
I meant Panasonic, not Prudential
As a former Fairfield County resident, employed at a professional services company near Norwalk, now living and working in NYC since 2007, I understand the concerns and gripes of those who find the Connecticut location less desirable. This is only further compounded by the fact that housing prices in Southwest Connecticut are exorbitant and that the transportation infrastructure and communting alternatives in this area are often downright nightmarish. Just imagine having to muddle down I-95 or the Merrit five days a week, which is a fact of life for many workers along the “Gold Coast” between Greenwich and Bridgeport.
On one hand, the influence of Southwest Connectict’s many well-heeled families have helped preserve the bucolic qualities that have lured many an upper and upper-middle class family. On the other hand, the area has become so overrun by these households, and the proliferation of professional services firms seeking a “cheaper” alternative to NYC, that its competitive advantages are beginning to fade. These factors contribute to its lessened ability to attract young and professional workers, who prefer more urban locales, where they have more employment and social options at their disposal as well as a greater ability to meet and network with others. And then you have elders, who are either growing tired of a multi-hop reverse commute or the agitating daily grind of bumper-to-bumper traffic on Connecticut’s congested highways.
As far as where UBS is moving to, the Ground Zero properties are for the moment having the same occupancy difficulties the original WTC complex did, albeit for far different reasons. So UBS is looking to relocate downtown into a buyer’s market, where they can probably get the best possible deal for Manhattan real estate from someone like Larry Silverstein who needs a big player anchor for his new development (and can’t directly do what the Port Authority originally did to fill up Towers 1 and 2 in the early 1970s, which was basically relocate their own offices there and pressure New York state to do the same with their Manhattan offices).
UBS gets a more prestigious “name” location, and no doubt gets some nice tax breaks from the city in a location that won’t be very convenient for anyone actually living in the area around their current Connecticut site, but will have decent access to New Jersey, for anyone wanting to work for the company but not wanting to pay NYC taxes.
The flip side, is that if you live in Fairfield becuase of your UBS job, it will be very little fun traveling every day to lower Manhattan.
The trend in the last few years has been for rich people to live in Manhattan because of the amenities, and reverse-commute if they need to. Greenwich and Stamford are in the unique position that among people who work there (and don’t necessarily live there), transit commuters are richer than car commuters, by a large margin.
The truly rich can do both, have houses wherever and also have a place in Manhattan for wherever they want to be. Billionaires and multimillionaires are highly mobile people, and many of them are bicoastal if not tricoastial (metro NY, Southern Cali, and the Gulf Coast).
I’m not talking about billionaires – I’m talking about people who make $250,000 a year.
This reminds me of an article I read in the Times some time ago on transit oriented development. It reguarded a Dallas based accounting furm that moved to the burbs & ended up returning to downtown Dallas. Some of the reasons sighted are similar to what UBS is going through now. In particular was the access to Dallas’s light rail system that stops near the companies offices.
Like New York, Dallas has a vibrent central core with restaurants & numerous entertainment venues. But the city away from it’s core tends to sprawl just like it’s suburban neighbors creating traffic congestion.
As fuel continues to rise, living in far flung suburbs & driving several hours each way to & from work will be comeing to an abrupt end.
So all 25 million people living in Texas will be moving to Park Slope? I should get in on a brownstone there before it’s too late!
1: it’s charming that a UBS employee is concerned about the $300/month
2: what extortion demand will UBS bring on the city tax dept?
Ben, the article is complete nonsense. Nobody has buyers’ remorse after SIXTEEN years. Do you believe that UBS just disocvered, after SIXTEEN years, that they are far away from civilization? I’m willing to bet that NY is offering them a huge tax break to move back and that is the real reason they are returning.
The whole article is nonsense because or a rhetorical flourish by The Times? I think you are ignoring the forest for one tree. They want to move back because they can’t attract top young talent to trek out to Connecticut. That’s undeniably clear from a few sources.
“They want to move back because they can’t attract top young talent to trek out to Connecticut.”
It took them 16 years to discover that? How do all of the hedge funds in Greenwich attract top talent?
Not to mention that Prudential has no problem getting top talent to go to NEWARK. I mean, if people are willing to go to Newark, surely they will go to Stamford. And Citi just aunnoced that they are moving several hundred jobs from NYC to Jersey City. So I don’t buy any of this “we can’t attract top talent because we are in Stamford” stuff. Maybe they are not willing to pay enough for top talent.
Now you’re talking about the differences between a 15-minute PATH ride and a 45-minute MetroNorth commute. You can’t just discount that.
So then what about the hedge funds in Greenwich? How do they attrac top talent? Certainyly Greenwich and Stamford are comparable in commute distances.
Two points:
1. As I said in the piece: “I doubt UBS’ actions are going to signal some grand trend of big companies repatrioting to urban areas.”
2. Smaller hedge funds in Greenwich, Connecticut — which is 16 minutes closer on a local train than Stamford — have to attract far less talent than UBS does. Plus, anecdotally, my friend left his hedge fund job in Greenwich because his commute sucked so much. It’s just easier to replace one person than it is to find 200.
But this cuts two ways. Presumably UBS is happy with most of its existing employees. Likely many have made commitments to CT over the last 15 years with ties to schools and towns in the area. UBS likely loses many of those people. I doubt that the typical commuting pattern into its office is from Manhattan. But it’s undoubtedly the case that a Manhattan presence is a strong way to draw younger people into your orbit.
UBS likely wants to play both CT and NYC against each other to see who will give the biggest tax breaks. They have not committed into moving into Manhattan YET.
I actually prefer reverse commuting to Westchester than to Jersey City. It’s much easier to get a seat on MNR than on the subway. Plus, the transfer from Fulton St to the PATH is an above ground walk.
Clearly, staying within Manhattan would most likely be the best commute, but it can still take upwards of 45 minutes for that depending on where you live.
Greenwich is 16 minutes closer on the local train, but Stamford has an express schedule, making it faster to get to Stamford. Although I do agree with the overall sentiment of the pain of reverse commuting, “once-an-hour commuter rail” is inaccurate when talking about MNR:
http://as0.mta.info/mnr/schedules/sched_form.cfm
The express trains come every hour in the off-peak. The local trains come twice an hour in the weekday off-peak (offset by 27 rather than 30 minutes) and once an hour on weekends.
As for staying within Manhattan, for a year I lived on the Upper East Side while still going to Columbia. Total commute length was 39 minutes at best, and because the M72 is unreliable it was often closer to 50. If I’d just missed the bus, it was faster to walk across Central Park.
Well, something else that has happened over the past 16 years is that New York (more specifically, Downtown Manhattan and Northwest Brooklyn) has become a more attractive place to live. Much like other places such as Austin, San Francisco, Seattle, etc., it is a big magnet for educated young people. A job in Manhattan is more attractive to them than a job in Stamford.
Good point. Fifteen years ago, many people were still trying to get out of NYC, and college grads were leery about coming to the big, bad city. Kids today love, love, love the city, especially Manhattan and Brooklyn. If you told a NYer in 1991 that Brooklyn would be the hottest place to live in NYC, they’d have laughed their asses off, hard! Stamford is THE most boring town I’ve ever had the displeasure of spending a summer in (don’t ask) and every time I go through it on the train or while driving, I get stomach aches.
Kids change where they want to be really fast. Manhattan no doubt has lots of clubs and restaurants, yes. But where’s the beach? All the way in NJ or in Long Island (Coney Island and Rockaway are ghetto on the beach). There are other types of fun that are severely lacking in Manhattan (any kind of outdoor fun). Also, if you grew up in a house living in some expensive hole in the wall eventually gets tired.
After 15 years, the tax breaks from the 1990s must have expired. UBS never built the buildings of other “phases” of their tax breaks. If you look around their headquarters, you’ll see plain old asphalt parking lots on their property, even though their building has garage parking. The asphalt parking lots are other “phases” they were supposed to build on. Instead UBS leased space in “One Stamford Forum” (ex-GTE building) some years ago in the mid 2000s. So yeah, dont complete the terms of your tax breaks, they will expire.
I saw that article as well. I hope it means some good news for filling out Ground Zero. Note that the article never mentioned whether CT’s serial tax increases, including a big one this year, was a factor. CT had no income tax at all until fairly recently and now it’s up to something close to the area average. The new tax raising administration in CT might have something to do with the considered move, and might not, but it was never explored. Certainly the tax advantage associated with CT has withered in recent years.
NY is a very high cost place, no doubt about it. And so, if I can identify a negative to go with the positive, it would be that what makes sense for a high value add shop like UBS is probably not relevant for other industries with lower value add, which is more or less from where you draw your lower middle class jobs.
Finally, ok so Stamford is not so hot (and I’ve worked there, I agree), so what does Stamford do? The CT coast was not uninhabited before UBS got there. There is a long history of cities surviving and prospering from Greenwhich to New Haven. What should these places do? I saw complaints above about I-95 and the Merritt, should these sealed in amber roads, be modernized and expanded? Should the area turn to Manhattan-lite?
Connecticut has 2 reasons why 95/Meritt will NEVER not be clogged. The first reason is “fix it first” laws passed by the legislature. Second reason is since CT a constant EPA smog/polution/soot/invisible boogeyman “control zone” “impact area” whatever, it is illegal to expand ANY highway capacity, not sure if under state or federal law. CT has been building extra long on-off ramps on 95, where the on ramp lane gets extended a mile to the next off ramp. You technically not increasing capacity by doing that, so thats legal.
[…] few days ago, UBS made headlines when it announced its interest in moving back to Manhattan. While the cynical among us wondered if this was just a ploy to gain more favorable tax breaks by […]
commuting from the city to stamford or even new haven wouldn’t be so bad if those metro north trains wouldn’t go so darn slow. 100 minutes from gct to new haven? seriously? wtf?