City: Rediscovering the Center

20 The Corporate Exodus

20 THE CORPORATE EXODUS The out-migration started slowly. The first to move was General Foods, to White Plains in 1954. Ten years later IBM moved out, to Armonk. Then Olin, to Stamford. In 1970 the momentum picked up. A few corporations headed for the Sunbelt. Most headed for the suburbs , to Connecticut's Fairfield County in particular. By 1976 over thirty major corporations had moved out of New York City, and more were leaving—including one of the biggest, Union Carbide. Office vacancy rates were climbing. With the city on the edge of bankruptcy, it looked as if a full-fledged rout was in the making. High time, many people said. Even New Yorkers joined in the reprehension. Couldn't blame Union Carbide, the New York Times editorialized; the city had let it down. Dr. George Sternlieb, director of Rutgers' Center for Urban Policy Research, who had been prophesying such events, fairly chortled at their arrival. "It takes a man who's been shot in the head a while to realize he's dead," Sternlieb observed. "New York may not realize it, but if you look at the numbers it's clear that New York is dead." But the rout did not come off.The bad news about New York had been so bad that a classic bottom was being formed. Any corporation that had not yet decided to leave probably would not leave. The ones who had left had long before signaled their intentions. In our research on public spaces we had found an early warning indicator. It was the The Corporate Exodus [285] corporation's own building. Often it would give an advance tip that the corporation was not long for the city. Union Carbide's headquarters on Park Avenue was on such. This sleek black building was on the Skidmore, Owings, and Merrill's best, and it was superbly located. In operation, however, it bristled with distrust of the city. Large strips of empty space bordered its sides and fronts, and with nary a bench or a ledge for anyone to sit on. Guarding entry was a corps of guards. It should have come as no surprise when the company announced in 1976 that it was forswearing the city and would move to Danbury, Connecticut. Union Carbide's timing was not very good. The mass exodus was just about over. Preposterous as it may have seemed then, the bad news was peaking just as the city's competitive position took some decided turns for the better. Overseas business had become a great stimulant; there was an influx of foreign firms, especially in finance. International divisions of corporations were expanding and it was in New York that they were doing it. A number of firms that had earlier contemplated leaving the city had second thoughts. Philip Morris announced it would stay. So did Pfizer. New York's troubles were by no means over, but there was to be a respite, and time for mulling over some lessons. One thing had become clear. While the relocations were touted as economic measures, they were in fact very costly, and for more parties than the corporations. Let us follow the Union Carbide case. At 270 Park Avenue it had a fifty-three-story building with 1.2million square feet. It sold it for $110 million, or $92 a square foot—a fire-sale price for such a building at such a location, and a great coup for the buyer, Manufacturers Hanover Trust Company. It sold its previous headquarters , a smaller building, for $161 million, or $333 a square foot. Union Carbide's new headquarters would be slightly larger than the old one: 1.3million square feet. It would cost $190 million. To link up with the highway system, a freeway section and cloverleaf had to be constructed, the cost to be borne by federal taxpayers. The design, by Kevin Roche and John Dinkeloo, was a handsome one and in horizontal terms matched the highly centralized management structure of the company. Some observers were surprised. They thought the company would take advantage of the move to shift to a looser, more contemporary organizational set up, with more autonomy for the divisions. But it did not, thereby producing, in the words of one critic, a monument to the 1950s. In any event, it was far away: some ninety miles from New York and in an area not well served by mass transportation. Relocation costs were heavy: $40 million. Of thirty-two hundred...