August 2004
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Citigroupís Huge
New York-Metro Shuffle

The financial-services powerhouse is
sending 3,500 back-office jobs to New Jersey
and Queens from Lower Manhattan — where
Citigroup plans to backfill with 2,500 new front-office jobs.
Mayor Michael Bloomberg (at podium) discusses Citigroupís plans to relocate 1,600 employees to Long Island City. Photo: Edward Reed, Mayorís Office

by JACK LYNE, Site Selection Executive
Editor of Interactive Publishing

NEW YORK Citigroupís (www.citigroup.com) expansion planning team mustíve burned loads of midnight oil lately: In a sweeping reorganization of its New York-metro portfolio, the financial-services giant last week announced that it will relocate 3,500 existing back-office jobs while creating 3,150 new ones — most of them front-office positions.
       The huge real estate
shuffle includes:

  • the move of 1,900 Citigroup jobs that are now based in Lower Manhattan to the Queens cities of Melville and Long Island City;
  • the relocation — aided significantly by US$52.7 million in Garden State incentives — of another 1,600 Lower Manhattan jobs to Warren Township, N.J., where Citigroup plans to hire 650 new workers in the next two years; and
  • the planned addition of 2,500 new front-office jobs over the next two years in Lower Manhattan.
       Citigroupís moves are part of a steadily growing trend among the host of financial bluebloods that are headquartered in New York City. Those companies are relocating many back-office and support functions to nearby areas that provide headquarters proximity at considerably lower prices.

Citigroup in Long Island City is building Court Square Two, a $200-million, 14-story office tower, pictured in the rendering above. Photo of rendering: Edward Reed, Mayorís Office
A Tower Rises in Queens
The news of Citigroupís multi-faceted reorganization broke in one big wave on July 13th.
       By the time New York Mayor Michael Bloomberg (R) and New Jersey Gov. James E. McGreevey (D) held separate press conferences announcing the projects, they both were well aware of where Citigroupís jobs were headed. But neither mentioned their rival neighboring state by name until prodded by questions.
       Citigroup chose to send its biggest corporate guns to the announcement in Long Island City. The company will house 1,600 of the employees itís relocating in Court Square Two, a $200-million, 14-story office tower that it will begin building next year, Citigroup President Robert Willumstad explained.
“We are continuing our growth story in New York City,” said Citigroup President Robert Willumstad (pictured), who said that the company plans to add 420,000 sq. ft. (37,800 sq. m.) to its current 9.3 million sq. ft. (171,000 sq. m.) in Manhattan.

       The new 475,000-sq.-ft. (42,750-sq.-m.) facility will sit across the street from Court Square One, the 48-story tower that the company built there in 1989. Adding the new tower in Long Island City will more effectively consolidate Citigroupís back-office positions, Willumstad said. Another 300 back-office jobs now in Manhattan will be transferred to Melville, N.Y., 30 miles (48 kilometers) east of Long Island City.
       In addition to constructing Court Square Two, Citigroup will fund an upgrade of the local subway connection to accommodate the large influx of new jobs. The company will pay to have an escalator installed connecting the G and Number 7 lines. That escalator will enable passengers to walk underground between those lines, rather than having to walk outside as they do now. The Court Square station is only one subway stop from Citigroupís Manhattan headquarters.
       The New Jersey relocation actually means an increase of Citigroupís head count in its home city, company officials emphasized at the announcement.
       “We are excited about our plans to continue growing in New York City,” said CEO Charles Prince. “We are the largest private-sector employer in New York City, and we expect to add even more jobs here over the next two years.”
       Added Willumstad, “We have grown in New York City, and we are continuing our growth story here. We are not giving up space in Lower Manhattan.”
       Citigroup, he continued, plans to add 420,000 sq. ft. (37,800 sq. m.) to its current 9.3 million sq. ft. (171,000 sq. m.) in Manhattan to house the new growth there.
       Later, Willumstad was asked if he saw any potential obstacles to the companyís adding 2,500 new front-office jobs in Manhattan in the next two years.
       “Thatís not been our problem,” replied Willumstad, citing Citigroupís 2003 annual sales of some
$94.7 billion.
“Citigroup has launched an economic revolution for businesses and residents of Queens here,” said Empire State Development Chairman Charles Gargano (pictured speaking at the AWIB Chinatown Summer Festival Press Conference).

Bloomberg: ĎA Good Trendí
Bloomberg similarly characterized Citigroupís reorganization as good news for New York City. If the company hits its Manhattan hiring projections, the city will realize a net gain of 600 higher-end jobs, he pointed out.
       “Yes, some jobs are going to New Jersey, but more jobs are coming here, and thatís the trend that you want,” said Bloomberg. “Lower-paying jobs are moving out of the city, and higher-paying jobs with a higher intellectual content are moving to the city. Thatís a good trend.”
       Citigroupís shuffle definitely continues a good trend for Long Island City. In recent years, the area has attracted sizable numbers of financial-services and insurance industry jobs.
       “Long Island City has become New York Cityís newest central business district,” said Bloomberg. “Citigroup was a pioneer in recognizing the economic potential [here].”
       Added Charles Gargano, chairman of Empire State Development (www.empire.state.ny.us), “Citigroup has launched an economic revolution for businesses and residents of Queens here.”
       Citigroupís local presence has grown to 4,800 employees in the 1.4-million-sq. ft. (126,000-sq.-m.) Court Square One — part of the companyís 6,300 total jobs in all of Queens. Metropolitan Life is another of Long Island Cityís major players. MetLife relocated 1,800 Manhattan employees to the city last year.
“Thanks to our wise investments, more people are employed today in New Jersey than ever before in history,” said Gov. James McGreevey ((pictured a town hall meeting earlier this year with at Newcomb Hospital in Vineland).
       “They were the pioneers who came here and took a chance on us,” Queens Borough President Helen Marshal said of Citigroup. “As you can see, it was a winning horse and a good bet. Long Island City is truly coming into its own, and we are going to give New Jersey a run for their money.”

New Jersey Subsidies Were
Pivotal in Edging Out Connecticut
But New Jersey, Citigroup demonstrated, was definitely still running — and using a considerable chunk of money in the process.
       “Weíre very proud to welcome this significant Citigroup investment in New Jersey,” said McGreevey. “Thanks to our wise investments, the stateís economy is creating jobs at an outstanding pace, and more people are employed today in New Jersey than ever before in history.”
       New Jerseyís estimated $52.7 million in subsidies will come from the stateís Business Employment Incentive Program (BEIP). The BEIP awards cash grants of as much as 80 percent of the income tax thatís withheld from any new jobs created by a qualifying project.
       McGreevey last year tried to suspend the subsidy program. Facing a $5-billion state deficit, the governor unveiled a fiscal 2004 budget that proposed temporarily dropping BEIP.
       But New Jerseyís business community raised a major ruckus, including the state Chamber of Commerceís (www.njchamber.com) “Whereís the BEIP?” campaign. McGreevey soon changed course, signing a revamped BEIP into law in September of last year.
       Citigroup is among the targeted industries that qualify for the new programís maximum subsidies. BEIP targets financial services, along with biotech, high tech, logistics and transportation.
 
Citigroupís newest site in New Jersey is at the Warren Corporate Center (pictured above).
     New Jerseyís incentives were a decisive factor in Citigroupís decision. Without the subsidies, the company wouldíve moved the back-office jobs instead to Stamford, Conn., according to officials with the New Jersey Economic Development Authority (www.njeda.com), which approved the BEIP grants.
       

Citigroup Will Invest $80
Million in Former Lucent Campus

Citigroup has chosen a vacant five-building campus in Warren Township that was formerly occupied by Lucent Technologies. The company will occupy three of the five facilities in the 829,000-sq.-ft. (74,610-sq.-m.) complex. SJP Properties owns the campus, which sits some 33 miles (53 kilometers) west of New York City. Citigroup will invest $80 million in the Warren Township property, company officials explained.
       “We are excited about building a state-of-the-art technology facility in Warren Township,” said Debby Hopkins, Citigroupís chief operations and technology officer. “Most importantly, we are excited about adding new jobs in New Jersey over the next few years.”
       The 1.600 jobs that will be transferred from Manhattan come from two of the companyís subsidiaries: Citigroup Technology, which develops software and provides production support, and Citigroup Global Markets, which primarily focuses on research. Another 750 Citigroup workers now at other New Jersey locations will also be relocated to the Warren Township site.
       Citigroupís newest Garden State site was built by ATT. Lucent recently vacated Warren Corporate Center, where it had employed as many as 2,800 workers.
   



©2004 Conway Data, Inc. All rights reserved. Data is from many sources and is not warranted to be accurate or current.