A major financial institution is planning to vacate its offices in glossy Manhattan towers, dealing a blow to investors' confidence in real estate owners.
State Street Corp. plans to move 500 employees out of its Big Apple offices and into coworking spaces, existing offices in the suburbs or to telework, The Wall Street Journal reports. The Boston-based company's decision is the most high-profile example of a financial company leaving its New York City office space entirely due to changes brought on by the coronavirus pandemic.
"Like most other companies, we have seen our employees adapt quickly to working remotely," State Street spokesperson Edward Patterson said in a statement to Bisnow. "We intend to capture and adopt the new ways of working that have arisen during the Covid crisis so that we make the improvements and make adjustments as needed."
The company signed a 10-year lease for 106K SF in Vornado and The Trump Organization’s 1290 Sixth Ave. in 2013. It plans to exit this office as well as its office at 1040 Sixth Ave., Patterson told Bisnow. This space will be put on the sublet market, the WSJ reported.
In addition to the Manhattan coworking space, State Street employees will have the option to go to work in Clifton, New Jersey; Princeton, New Jersey; or Stamford, Connecticut, Patterson said.
"We absolutely see the value for having physical space in the area that serves as a hub for employees and clients in the NYC area," he said. "But we also know this is a tremendous opportunity to reimagine and redesign the workplace in a very fit-for-purpose way that improves performance, productivity and our employees’ experience."
Hours after news of the move was reported, stock prices for some of the biggest office real estate investment trusts dipped — including SL Green Realty Corp., which dropped 1.1%, according to Seeking Alpha.
State Street is not looking to get out of office space in all gateway cities, though. It plans to follow through on a deal signed in 2019 to take up 510K SF in a new development for its headquarters in Boston.
State Street is one of several companies planning to move out of the office capital of America. Philip Morris International announced plans in June to move its headquarters from New York to Connecticut, citing the state's more business-friendly environment.
While some companies are moving out to the suburbs, others have decided to make New York their home base for the first time. In January, Beam Suntory announced it was moving its headquarters from Chicago to New York and signed a 100K SF lease at SL Green’s 11 Madison Ave.
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