In late August, a crane teetered over the construction site for Royal Bank of Scotland”™s planned Stamford office, forcing the evacuation of 200 UBS employees at a nearby office building.
After stabilizing the crane and making plans for its removal, the city is still gazing nervously at a wobbly credit market that could buckle an employment boom at RBS, UBS and other major financial employers.
It has been 20 months since RBS announced plans to move 550 employees from Manhattan to a new office in Stamford, along with 700 workers at its RBS Greenwich Capital unit in Greenwich. At the time, the company indicated it expected the office to accommodate up to 600 additional workers, as well.
Even as the building”™s lower levels rose steadily this summer, however, the mortgage market was knocked off its foundation, with many fearing a destabilizing of the overall financial markets. Sen. Christopher Dodd, chairman of the U.S. Senate Banking Committee, warned this month that between 1 million and 3 million people could lose their homes after signing mortgages with ballooning payments.
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Signs of the times
Connecticut”™s first inkling of the enormity of the crisis came with the shutdown of Mortgage Lender”™s Network of Middletown, but Fairfield County is now seeing its own warning signals.
In May, UBS announced it would shutter its Dillon Read Capital Management hedge fund that was overly exposed to the U.S. mortgage market. Thomson Financial reported in August that UBS is planning job cuts, catching analysts by surprise who said that the company has a history of riding out down markets through hiring freezes and other strategies, and not through layoffs.
In late August, RBS laid off a quarter of its U.S. team that securitizes mortgage debt portfolios, including a senior executive who led the RBS Greenwich Capital unit.
Such tremors could have huge ramifications for Stamford, which has been lobbying New York City firms to relocate operations as a way to shorten commutes for executives and workers.
Home to 6,140 U.S. investment banking and hedge fund employees as of March 2006, 3.5 percent of the industry total, Fairfield County denizens pocketed nearly 10 percent of industry earnings, a new U.S. Bureau of Labor Statistics study shows.
Thanks in part to gargantuan bonuses earned by rainmakers, Fairfield County workers studied in the report earned a jaw-dropping $23,850 weekly on average, $7,000 more than their peers in New York City pulled in. The high-finance sector accounted for one in every five dollars earned by Fairfield County workers, whose average weekly wage was $1,950 in the spring of 2006.
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On the fast track
It is small wonder that New York City real estate firm RFR Holding Inc. was able to line up financing to buy seven Stamford office buildings this spring for roughly $850 million, with the price approaching a record $500 a square foot.
At the time of the sale, RFR President Jason Brown said he expected to be able to increase rents substantially as leases turn over, as has been the case with the hedge fund haven Greenwich.
Stamford is erecting offices (and luxury condos) as fast as they can be approved. The RBS project is only one of several buildings envisioned to flank Interstate 95 and the Stamford train station. Antares Investment Partners is planning a waterfront residential development that could total up to 4,000 units of housing when complete. Antares has benefited itself from the financial sector”™s increased interest in Stamford and Greenwich, where it manages its Fairfield County developments; with $36 million in revenue last year, the real-estate developer was the 226th fastest-growing company in the United States in 2006, according to Inc. magazine.
In mid-August, Purdue Pharma L.P. inked a lease allowing it to move 400 workers from its downtown headquarters a mile north to cheaper office space. UBS has long coveted its landlord”™s Purdue Pharma space to accommodate its recently swelling Stamford work force, according to local real-estate brokers. At last count, UBS employed more than 4,300 people in Stamford, making it Fairfield County”™s third-largest private-sector employer after United Technologies Corp. and General Electric Co., whose GE Money unit is based in Stamford.
GE Money may have stabilized its Stamford work force following its decision to divest WMC Mortgage, a Burbank, Calif. subprime lender it purchased three years ago from a private-equity firm.
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