Buffalo is well positioned to attract more back-office jobs from financial services firms.
But watch out for competition from Montreal.
Those were among the conclusions the Boyd Company reached in a site-selection study of 45 U.S. and international locations. The New Jersey-based consulting firm helps corporations evaluate where to put their operations.
The Boyd Company calculated the operating costs for a hypothetical 30,000 square foot corporate back office in the financial services sector, with 125 workers. Buffalo was included as a nearby alternative for companies with New York City corporate offices – a relationship already evident here with companies like HSBC Bank USA and Citigroup.
The study estimated total annual operating costs for a Buffalo center at $9.6 million, the second-lowest cost of any U.S. location in the survey and 20 percent less than New York City. Overall, Buffalo ranked 30th on the list in expenses; Jacksonville, Fla., was the least-expensive U.S. city for the center, at $9.2 million and ranking 33rd.
The survey estimated costs like labor, power, rent, corporate travel and sales taxes for a center in each of the cities. San Francisco was the most expensive city on the list, at $12.5 million, while Tunis, Tunisia, was cheapest, at $3 million. All five Canadian cities in the survey were rated cheaper than Buffalo, influenced by a weak Canadian dollar.
In fact, Montreal was the lowest-cost city in North America, at $7.2 million, which was a 25 percent discount from Buffalo’s figure. John Boyd Jr., a Boyd Company principal, said Montreal is a city others should pay attention to.
“Buffalo is competing more with Montreal, whether it realizes it or not, than it is with Syracuse or Rochester or the Lehigh Valley or Jersey City for new corporate investment,” Boyd said.
Montreal has attracted jobs from employers like Morgan Stanley, with its mix of generous tax incentives, an exchange rate favorable to U.S. companies, its bilingual work force, and lower health care expenses, he said.
Boyd said companies headquartered in U.S. cities are relocating some of their operations domestically. “We’re seeing this almost unprecedented move of back-office operations out of prohibitively expensive Manhattan toward lower-cost alternatives. Buffalo is really working with that trend right now.”
And as some companies relocate their corporate headquarters, their back-office operations potentially become mobile, too, Boyd said. “There’s going to be some big opportunities for Buffalo over the next 18 months.”
Buffalo can best position itself for those jobs by knowing its competition and advocating for state incentive programs like the Start-Up NY tax abatement program to attract newcomers, Boyd said. And incentives for redeveloping city properties for living space, office space and retail make a place more appealing to a company mulling different locations, he said.
Boyd believes the fact that the Buffalo Niagara region already has a fair share of back-office operations in financial services encourages competitors to consider the market, rather than deterring them. Companies tend to not want be a “pioneer” in a given market, he said. “The requisite skill sets in this labor market are strong.”
KeyCorp’s planned deal for First Niagara Financial Group has raised the specter of large-scale layoffs in financial services in the region. As difficult as that could be, Boyd said other companies his firm works with might see hiring opportunities here.
“Our clients will now view Western New York more favorably, because the labor market is now enriched with highly skilled workers within the financial services sector,” he said.