After weeks of speculation BlackRock Financial Management, the largest publically traded investment fund in the United States, will leave its offices on Scudders Mill Road in Plainsboro at the end of 2011, taking approximately 1,300 high-paying jobs to either Philadelphia or New Brunswick, a spokeswoman said Monday, July 21.
Bobbie Collins, BlackRock’s director of communications in North America, said that the firm will run out the lease it inherited in 2006, when BlackRock acquired the majority share of Merrill Lynch’s mutual fund division. Merrill Lynch maintains 44 percent ownership. The site at Scudders Mill Road, she said, is “a Merrill Lynch site, not a BlackRock site,” and that once the lease expires, the firm will move its employees to a BlackRock facility. She also said the long lead time gives BlackRock enough time to make the right decision.
It also gives economic leaders a chance to woo BlackRock into staying in the state. In Philadelphia officials and Pennsylvania Governor Ed Rendell were actively courting BlackRock, just as legislative sessions in both states drew to a close for the summer (U.S. 1, June 16, 2008). The Philadelphia Inquirer, which broke the story, stated that city officials would consider BlackRock’s move to Philadelphia to be “a historic influx of professional workers into the city — with each currently earning an average annual salary of $125,000.” Rendell and Philadelphia Mayor Michael Nutter have been working to lure the company since the fall, and have made it a top priority.
Philadelphia badly wants BlackRock as a chief tenant to anchor a proposed sister office building to the three-year-old Cira Centre, which in turn would help create a mini-neighborhood and close the gap between Center City and University City.
To go forward, BlackRock and Cira Centre developer Brandywine Realty Trust want the city and state to quickly pass legislation that would, in essence, exempt BlackRock from paying any taxes, except the city wage tax, through 2025, according to the Inquirer article.
When word of a potential departure appeared in New Jersey newspapers on July 16 it immediately turned political. The most vocal official was state Senator Tom Kean, the Republican minority leader in Trenton. Kean blasted the (Democratic) Corzine Administration for failing to head off a flight of top talent and wages. “The exodus of jobs and capital from New Jersey is reaching epidemic proportions,” Kean stated in a release on July 16, just one day after word of a potential move was reported in statewide newspapers.
But Kean’s reaction may be premature. While early reports, mainly from Philadelphia news outlets, made unconfirmed overtures that BlackRock would relocate to that city, Blackrock’s Collins said there is still an even chance that the firm could stay in New Jersey. What’s more, it could relocate to exactly where legislators like Kean are hoping to see such large-scale employers go — to cities like New Brunswick, where urban transit hubs are the latest ray of hope in state developers’ arsenals.
Governor Corzine’s office, for now, is staying mum about what it can or will do to keep BlackRock. A spokeswoman for the governor said that the administration is “making good-faith effort” to convince the firm that New Jersey is the best place for it, but would not elaborate.
All this, of course, is based on the acceptance that BlackRock is serious about moving. For Gerard Fennelly, a commercial real estate broker and president of NAI Fennelly on Quakerbridge Road in Hamilton, the real question is not whether BlackRock will move — the announcement that it will could, after all, be a ploy to stir up courters — it is what is fundamentally wrong with how New Jersey handles such deals.
Pennsylvania, says Fennelly, has a vastly more efficient system than New Jersey through which it attracts and keeps corporations. At the head of this system is Governor Rendell himself, who openly attaches his his enthusiasm to economic development projects. This more centralized approach, with its charming CEO-like governor at the helm, is a mjor reason Pennsylvania is so successful at scoring corporate relocations, Fennelly says.
New Jersey, on the other hand, has an inefficient network of advisors with too many voices and no central figure directing the action. “People are doing business in the political sense better than we are,” Fennelly says. “Why? That’s the question.”
The looming question for the state, should BlackRock leave, is what damage will be wrought by BlackRock’s departure. Factoring the average salary and the number of employees in Plainsboro, BlackRock’s exodus would cost New Jersey more than $1.6 billion in annual taxable income and leave a gaping hole in greater Princeton’s commercial real estate market.
A move to New Brunswick, however, would keep revenues in the state and be an enormous boon to that city. Glenn Patterson, New Brunswick’s director of planning, community, and economic development, says landing BlackRock would bring "a substantial — I can’t emphasize that word enough — ratable."
Patterson says the city has been working closely with the state to build an incentive package including tax breaks and more customized redevelopment plans. Being a transit hub, the city also could likely waive the 2.5-percent tax the state levies on non-residential construction.
"It would be a real feather in anybody’s cap," Patterson says. "We think we’d be a perfect place for another world-class company." New Brunswick is home to the world headquarters on Johnson & Johnson.
What stands in the state’s way is Philadelphia’s zeal and the fact that the city has become a district of large financial companies, such as the Vanguard Group and, most troubling for New Jersey, PNC Financial Services. PNC has had a major stake in BlackRock since 1994, when PNC Bank Corporation bought BlackRock for $240 million and became the sixth-largest money manager in the United States.
On July 17 BlackRock released its second quarter statements, announcing $1.4 trillion in worldwide assets.