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Morgan Stanley's New Backup Site To Shift Jobs Out of New York City

By RANDALL SMITH and PETER GRANT
Staff Reporters of THE WALL STREET JOURNAL

January 29, 2002

NEW YORK -- The blue-chip securities firm Morgan Stanley chose a site in Westchester County, N.Y., for a backup trading facility, the latest blow to New York City stemming from the terrorist attacks last September.

The decision means Morgan Stanley, which had considered sites both in and outside Manhattan for the facility, will be shifting an estimated 1,500 to 2,000 jobs outside the city in order to spread them out geographically.

Morgan Stanley announced Monday a preliminary agreement with ChevronTexaco Corp. to purchase the former world headquarters of Texaco, a 725,000-square-foot office building on 107 acres in Harrison, N.Y. Terms weren't disclosed.

The goal is to allow the firm to continue its trading operations, in case of another attack, at a site that isn't on the same power switch or telephone grid. People close to the firm have said the new site would have enough employees to maintain seamless trading "continuity" in the event of a disruption at the firm's Manhattan offices.

Morgan Stanley has 61,319 employees world-wide, including 14,000 in New York City; the firm said Monday "the vast majority" of those in the city would stay there, and that its headquarters would remain on Broadway just north of Times Square.

The firm was the largest tenant in the World Trade Center and lost nearly 1.2 million square feet when the center was destroyed. Its 3,700 employees there have been relocated to sites elsewhere in midtown Manhattan, Brooklyn and New Jersey.

Separately, Goldman Sachs Group Inc. said it plans to move its equity-trading department in 2004 to an office complex the firm has been developing in Jersey City, N.J. Since that complex has been planned since 1999, the Goldman move doesn't necessarily represent a new loss of jobs by the city.

New York City has been battling an exodus of jobs since Sept. 11, with mixed results. While major downtown employers such as American Express Co. and Merrill Lynch & Co. are returning to lower Manhattan, others have put down stakes elsewhere in the region. About 23,000 of 135,000 employees who worked in buildings destroyed or damaged on Sept. 11 are now working outside New York, according to a survey by TenantWise.com, an online real-estate brokerage firm in New York.

Morgan Stanley's planned relocation is one of the largest announced so far. "It's a blow to the city as a whole that these large financial-services campuses are now expanding on a regional level," says M. Myers Mermel, chief executive of TenantWise.

To help stem the flow, state and city officials last week announced an incentive plan that will provide companies grants of as much as $5,000 per employee for renewing a lease or moving downtown. Displaced businesses that lease space in midtown Manhattan also will get some benefits, but not as much as they would for returning downtown.

The Texaco purchase "is part of an overall effort by Morgan Stanley to address its space needs and business continuity planning requirements in the wake of Sept. 11," the firm said Monday, adding that "significant renovations and technology upgrades" are needed before any employees are relocated.

The move follows the firm's sudden decision Oct. 8, just four weeks after the attacks, to sell a newly completed office tower just one block from its existing headquarters to Lehman Brothers Holdings Inc. for about $650 million.

In announcing that sale, Morgan Stanley Chairman and CEO Philip Purcell noted that keeping the building would have left the firm with "trading and backup facilities ... concentrated in two buildings within one city block that are dependent on the same transportation and power infrastructures." Selling the tower, he added, would leave the firm "better positioned from a business continuity standpoint."

Copyright 2002 Dow Jones & Company, Inc. All Rights Reserved.
 

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