Stamford is the nation's
fourth-most costly place to have a corporate headquarters, according to a recent
study by a Princeton, N.J.-based corporate location consulting firm.
The
Boyd Co. placed Stamford behind No. 1 San Francisco, where the consultant
estimates the cost of operating a headquarters with 350 employees and 50,000
square feet of Class A office space at about $22.4 million a year.
New
York was second at $22.3 million, followed by Santa Clara County, Calif., at
$21.8 million and Stamford at $21.6 million.
The study measured costs
such as executive salaries, clerical, secretarial and information technology
labor, office rents, utilities and corporate travel.
Labor costs make up
70 percent to 80 percent of a typical company's annual operating costs, said
John Boyd, a consultant with Boyd Co.
The total annual cost of wages and
salaries ranges from $19.2 million in San Francisco to $18.7 million in Stamford
to $15 million in Savannah, Ga. Boyd rated the Georgia coastal city No. 100 in
its survey, with total annual operating costs of $17.3 million.
"One of
the reasons Stamford's labor costs are so high is its recruiting base," said
Boyd, who said the study covered only the city of Stamford and not neighboring
towns. "You get what you pay for. The labor market here is world-class and the
costs reflect that."
Many companies are willing to pay those high wages
to attract talented workers, said Jim Fagan, senior managing director with the
Stamford office of Cushman & Wakefield Inc. commercial real
estate.
"The (Boyd) study points to our strengths, not our weakness,"
Fagan said. "We have a highly talented labor pool that deserves to be
compensated in an above-average manner."
Fagan said operations that need
top-level talent, such as headquarters of large corporations and
financial-services firms such as hedge funds, would not migrate from Stamford to
lower-cost states.
Boyd said, however, that Stamford needs to recognize
that it has to compete with smaller, low-cost labor areas. He said companies
might keep their top executives here, but could transfer the lower
administrative functions to other states.
He mentioned General Electric's
transfer of workers from Manhattan to Fort Myers, Fla., and Time Warner's moving
of employees from Chicago and Manhattan to Virginia as examples.
"The
rules have really changed today," Boyd said. "There is unprecedented
preoccupation with reducing costs at all levels of the corporate
structure."
Companies could be attracted to smaller-market cities because
of lower housing and living costs, he said.
Many companies have left
Stamford and nearby towns to be in places with lower operating costs, said Dean
Shapiro, senior managing director at the Stamford office of CB Richard Ellis
commercial real estate.
He mentioned the former GTE Corp., which
relocated its Stamford headquarters to Texas several years ago, and UPS, which
moved to Atlanta from Greenwich more than a decade ago, as examples.
The
long-term implications are not whether companies will leave but whether the
Stamford office market is robust enough to replace them, Shapiro said.
In
the long term, Stamford should focus on its advantages for companies, Boyd said.
The city's entertainment, educational and cultural offerings could attract
European companies, he said.
"Stamford needs to continue to market its
strengths," he said. "It can't be all things to all industries."
In
another report released yesterday, New York-based Moody's Investor Services
rated the Fairfield County office market in the middle third of its quarterly
ranking of commercial real estate markets in the country.
Sally Gordon, a
Moody's vice president who conducted the study, said the county's office vacancy
rate is 16.7 percent and will increase amid reduced demand for space.
She
said reduced demand leads to low cash flow while landlords' operating costs keep
going up, making the market less attractive to real estate investors. Moody's
rates bonds that are backed by commercial mortgage securities.
