Wall Street Firms Leaving Area
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Tyco may sell old CIT unit - (ON24)
By CHRIS HAWLEY, Associated Press Writer
NEW YORK (AP) - Wall Street is moving off Wall Street. It started with globalization and online trading, but since Sept. 11 it is threatening to become a full-scale exodus, economic planners say.
Already, major trading houses - even ones unaffected by the World Trade Center attack - are moving divisions out of Manhattan, and thousands of financial services jobs have left the city, said analysts meeting Thursday as part of the World Economic Forum (news - web sites).
``If we just sit on what we have now, the larger firms that have anchored the financial services here are going to be moving more and more of their people to other locations,'' said Kathryn Wylde, president of the New York City Partnership and Chamber of Commerce (news - web sites). ``It could be bad.''
The fragmentation of Wall Street has become a curious footnote to a conference that has focused on how poor countries have suffered from globalization and borderless markets. With companies looking at cheaper labor and lower rent elsewhere - and the fear of concentrating all their employees on Manhattan, hit hard by the terrorist attacks - Wall Street may be getting a taste of its own medicine.
The financial district has been an institution since 1792, when stock brokers met under a buttonwood tree at 68 Wall Street and formed an exchange to buy and sell Revolutionary War bonds.
But since the early 1990s, banks and securities firms have been moving their ``back offices'' - the people who process bills and send out mailings - to places like Delaware and North Dakota, where rent and salaries are lower.
Securities firms have moved their records and backup systems across the Hudson River to New Jersey. Online trading and better communications means fewer brokers are needed near the New York Stock Exchange (news - web sites) in Manhattan. The fast-growing Nasdaq doesn't even have a trading floor, just two massive banks of computers, one in Connecticut and another outside Washington.
After the Sept. 11 attack, analysts predicted Manhattan would lose about 125,000 jobs, said Scott Corwin, an analyst with A.T. Kearney Inc. Nearly 53,000 financial services jobs were expected to move out of Lower Manhattan - the Wall Street district - and 19,000 had already left the city completely.
But since the projections in November, financial companies in other parts of Manhattan also started to move people elsewhere, Wylde said. ``What we didn't realize was how much the prospect of a second attack is driving business decisions,'' Wylde said.
Morgan Stanley Dean Witter, the financial services firm that had been the World Trade Center's largest tenant, has tentatively agreed to buy Texaco Inc.'s former headquarters in Harrison, N.Y, a suburb in leafy Westchester County north of New York.
Goldman Sachs Group Inc., an investment bank in the downtown financial district, is reportedly moving its entire equities staff, including its traders, to a new 40-story office building being built in Jersey City, N.J.
An internal Goldman Sachs memo obtained by several news organizations cited a lack of real estate and ``the increased importance, after the terrible events of Sept. 11, of distributing our major businesses in New York beyond the boundaries of lower Manhattan.''
Local real estate agents, meanwhile, have been trying to convince some companies to move to Brooklyn and the Bronx rather than leave New York City completely.
The hit to financial services is part of bigger problems caused by Sept. 11, analysts said. The attacks caused an estimated $83 billion in damage, and only about $50 billion will be covered by insurance, Corwin said.
The number of tourists that visited New York in 2001 is expected to be about 32 million, 6 million lower than had been expected. New York & Co., the city's tourism promoter, said it is trying to reverse a drop in international travelers, who spend the most money.
``But it's going to be a struggle,'' said Christyne Lategand-Nicholas, president of New York & Co. |
