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Goldman Sachs Moving Some Operations to New Complex

Staff Writer: The Record

January 29, 2002

Goldman Sachs Group has notified employees that it will move its equity sales, trading, and research operations out of One New York Plaza to its $1.3 billion office complex under construction at 30 Hudson St. on the Jersey City waterfront.

In an internal memo, the nation's largest underwriter of stock sales said the move would help it decentralize operations and integrate them with its Spear Leeds & Kellogg subsidiary, Bloomberg News reported Monday.

Separately, a Goldman Sachs rival, Morgan Stanley Dean Witter & Co., announced Monday that it is taking space in Westchester County.

Morgan Stanley agreed to buy a 725,000-square-foot building in Harrison, N.Y., from Chevron Texaco Corp. -- the former headquarters of Texaco, which has merged with Chevron.

Both companies say they have no intention of moving their headquarters out of New York City, but the moves are part of strategies to decentralize operations.

Goldman Sachs declined to comment on the internal memo or confirm which operations would move into the 2 million-square-foot complex in Jersey City. The company has said it will eventually occupy the entire building, enough space for about 5,000 workers.

Spear Leeds & Kellogg, a company bought by Goldman Sachs for $5.4 billion in 2000, already has operations at 10 Exchange Place in Jersey City.

Goldman Sachs employs more than 10,000 people in the New York metropolitan area, including those at Spear Leeds and a hedge fund strategies group in Princeton.

"We do intend to maintain our headquarters in lower Manhattan, where they've been since 1869," said company spokeswoman Andrea Raphael.

Goldman Sachs' lower Manhattan locations, all within walking distance of one another, are the 85 Broad St. headquarters and One Liberty Plaza, 10 Hanover Square, 32 Old Slip, 180 Maiden Lane, and 125 Broad St.

The company, which plans to begin occupying the new building in Jersey City late next year, in May received a state Business Employment Incentive Grant, based on a move of 2,000 employees.

The grant is worth $164.3 million over 10 years to the company, according to Glenn Phillips, spokesman for the New Jersey Economic Development Authority, which administers the grant program.

In November, a second grant of $1.6 million over 10 years was approved for relocation of an additional 75 Goldman Sachs workers displaced by the World Trade Center attack, Phillips said. Goldman Sachs, which may be considering other locations for those 75 employees, has not yet accepted that grant, Phillips said.

The $164.3 million incentive Goldman Sachs did accept is based on 80 percent of the state income tax the 2,000 employees, earning an average annual salary of $216,000, would pay over 10 years.

The move by Goldman Sachs is "going to add growth to the New Jersey economy," said James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. "It represents continued decentralization of the regional economy."

Although a company official said the move was not related to Sept. 11, the employee memo -- sent by co-Chief Operating Officers Eric Mindich and Eric Schwartz and the equities chief in Europe, Wiet Pot -- said the destruction of the World Trade Center made moving businesses out of lower Manhattan "increasingly important," and that Jersey City was chosen over sites in Manhattan and other regional locations.

"None fit our business objectives as well or were as attractive financially as Jersey City," the memo said.

The Jersey City waterfront is well-wired and on different power and telephone grids than lower Manhattan, Hughes said, and is preferred by financial companies looking for backup facilities to avoid business disruption while accommodating workers who live in New Jersey.

The complex at 30 Hudson St. is on the former Colgate-Palmolive site.

Raphael said it will include two buildings -- 40 stories and 11 stories -- linked by a glass atrium and with underground parking for 1,200 cars.

While the investment banks restate their commitment to stay in New York, the city is reeling from lost jobs since Sept. 11. It lost about 100,000 jobs in October, November, and December, while New Jersey gained 5,000, Hughes said.

Since Sept. 11, demand for Jersey City office space has pushed prices higher than those in lower Manhattan, according to M. Myers Mermel, chief executive of TenantWise.com, a Wall Street-based online real estate data company.

"Below Chambers Street, for Class A space, prices are in the mid- to low- 30s [dollars per square foot] range," he said. "In Jersey City, prices are now in the high 30s to mid-40s range."

A majority of workers displaced from lower Manhattan have been moved to midtown, where "an enormous amount of subleasable space came out of the woodwork," Hughes said.

Copyright 2002 North Jersey Media Group Inc.

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