New Jersey -- best known for big hair, Bruce Springsteen and a congested turnpike -- is saddling up for a real outlaw role: corporate looter.
In a quietly accelerating expansion, New Jersey has lured the bluest of blue chips from New York. Today, it stands as an upstart financial enclave capable of competing with the glamorous metropolis across the Hudson.
The latest convert is none other than Chase ManhattanBank. According to sources, the country's second largest bank is about to sign a lease with the Lefrak Organization to develop two office towers in Jersey City's waterfront Newport area. About 10 percent of Chase's 20,000 New York employees are expected to lug their briefcases to the new gilded complex (though the bank's headquarters will remain on Park Avenue).
Chase Manhattan joins other defectors such as Goldman Sachs, PaineWebber, Salomon Smith Barney, Merrill Lynch, Deloitte & Touche, Morgan Stanley Dean Witter, Lehman Bros. and several other financial powerhouses, all of which have established or are pursuing outposts in New Jersey. When this Who's Who of Wall Street sets up shop over the next two years, Jersey City will be home to about 20,000 professionals, according to Tom Gallagher, the mayor's chief of staff.
The emergence of "Wall Street West" -- or as some call it, New York's sixth borough -- has put the Big Apple on alert. Manhattan may still be the world's premier financial center, but Jersey City's rapid growth is making everyone from New York Mayor Rudy Giuliani to Gov. George Pataki sweat. New York last year boosted its marketing budget from $674,000 to $4.5 million to attract and keep businesses in the Empire State, and Sen. Charles Schumer recently brought together business and community leaders to brainstorm ways to stem the bleeding.
"We've gotten the wake-up call that we have to do more," says Mitchell Moss, the group's co-chairman and director of New York University's Taub Urban Research Center. "We have to be more aggressive."
Here's the main reason for the migration: Real estate in Manhattan is simply too expensive, and space is insufficient to accommodate growth. It's about 25 percent cheaper to build in New Jersey, and prime New York office space now leases for $50 a square foot -- almost double the price in Jersey City. The Garden State also offers generous tax incentives, and developers there are completing state-of-the-art office towers in about 18 months.
In fairness, New Jersey has long had its share of impressive financial tenants. But last December, when Goldman Sachs decided to build a 45-story tower on 2.4 million square feet in Newport, many saw the firm's announcement as the bombshell that would forever change the state's destiny. After all, if the country's snootiest investment bank sees its future there, shouldn't it be good enough for everyone else?
Not quite. So far, most firms have moved only their so-called back support to Jersey -- lowly tech people, number crunchers and the like. Well-heeled investment bankers, brokers and top execs are holding on tightly to their 212 area code, and the big kahunas of the financial world adamantly maintain that they have no current plans to uproot themselves from the Street.
So while New Jersey may be growing, it still hasn't shed its stepsister image or created a business culture that garners respect. As one Merrill Lynch employee puts it: "If a client flew in from Tokyo, we're not going to take him to Jersey City and say, 'Here's our offices.'" He'd think, 'What the hell is this?'"
So what the hell is New Jersey?
A quick trip across the river on the clean, efficient PATH train or on an inexpensive ferry leaves you at Jersey City's Exchange Place station with a monument welcoming you to ... "Siberia." It's not until you get up close that you realize it's memorializing Polish citizens, not making a bad Jersey joke.
Step outside and luxury high-rises come into view, reminiscent of suburban Dallas or Phoenix. Corporate towers line a four-block expanse, boasting stunning views of Manhattan. Few cars roam the wide streets; coifed professionals and sneaker-wearing secretaries freely meander the sidewalks.
The skeletons of the soon-to-be-completed office complexes bring to mind what Epcot Center's version of "Corporateland" might look like. A distant dilapidated warehouse is one of the only reminders of the old, grungy Jersey City. But judging from the bulldozers and cleared land, you get a sense that even that holdout will be replaced by another shiny masterpiece.
Only a few restaurants are tucked into the glassy buildings, mostly chains ` la TGI Friday's. One of the only happening after-work spots is the Iron Monkey, a surprisingly stylish bistro.
On a recent afternoon, a middle-aged, khaki-clad crowd gathered to watch the Mets, drink Harp on draft and dine on $9 avocado ceviche. Bartender Benjamin Sherman, who could name only five other bars in the area, says the weekday clientele consists "mostly of suits and not enough women."
Jersey City's younger set tends to rush back to Manhattan for happy hour. A young, slick-haired Merrill Lynch analyst was indignant when asked where one could get a drink in Jersey City. "Oh, I would have no idea. I live in Manhattan."
To be fair, many people working in "America's Golden Door" love their digs, especially if they live outside Manhattan. Their commutes are more palatable, and they no longer have to deal with crowds and congestion. One New York consultant said it's common for his stressed-out colleagues in Manhattan to "head over the river to get some work done."
The escape from the Wall Street rat race is one explanation for this westerly migration. But there's also a freshness about Jersey City. There's grass here, along with volleyball and basketball courts and terraces for barbecuing. You can stroll on new red-brick streets without fear of facing road-raged cabdrivers or an asthma attack. Granted, you might have difficulty finding a decent martini, but the trade-offs are worth it to more laid-back types. "There are many people who like a city environment and many people who are drawn to suburban campuses," said Joe Cohen, a Merrill Lynch spokesman. "But as the work culture evolves, it'll be interesting to see where the emphasis is placed."
Merrill Lynch has certainly helped inspire the evolution. The company now has 11,000 employees scattered over different sites in New Jersey, while 10,000 work in Manhattan. The company is building a new facility in Jersey City, and several thousand jobs will be added to that site over the next few years, Cohen says.
This future doesn't bode well for New York, but no one's panicking -- yet. "We're kind of fortunate because the economy is doing well," says Neville Bugwadio, senior vice president of corporate marketing for the Empire State Development Corp., a state agency charged with attracting and retaining businesses. "Even if businesses are leaving, there are plenty of others wanting to come in."
But if the economy slows and New York's key corporate tenants continue to take advantage of New Jersey's vigorous wooing, the Empire State could well be vulnerable.
New York still is the world's financial, media, arts and entertainment mecca. But it can't rest on its laurels and let New Jersey continue to snag prime tenants -- at least not without a fight, Bugwadio says. "We have to keep building an image of New York as the preeminent place for business."
Moss says one of New York's biggest problems is its bureaucracy. While New Jersey is known for speedy delivery of custom-designed high-rises, Moss says, New York has lagged in developing its few vacant lots (particularly those on the far western edges of neighborhoods like Chelsea). "New York City has allowed the West Side to become underused, while Jersey has been dangling tax incentives and providing large parcels of land."
Earlier this year, New Jersey approved a $200 million package of incentives to attract corporations. Chase Manhattan will reportedly directly benefit from this generosity, enjoying corporate income tax credits, grants for employee training and relief from sales tax on equipment and building materials. All that, and Springsteen, too.
David Schenkel, managing director at the CB Richard Ellis real estate brokerage in New Jersey, says there's no denying that a significant shift has taken place. "It's an evolution that's nowhere near the end. New Jersey has a great future."
No word yet on whether Chase Manhattan plans a name change.