The owner of One HSBC Center in downtown Buffalo is proposing to build a 10-story annex beside the city's tallest building to entice it's premier tenant to stay and bring additional jobs from the suburbs or New York City.
HSBC — which has been the largest tenant in the 38-story tower that bears its name since the building opened in 1972 — is considering a move to a different location, either in the city or the suburbs, when its lease comes up for renewal in October 2013.
The bank currently occupies 653,000 square feet on the seventh through 27th floors, the 29th floor and the surrounding base of the tower. It issued a request-for-proposals to developers and property owners earlier this year and has retained national real estate brokerage firm Jones Lang LaSalle to help with the search.
The property search has created a major buzz in local commercial real estate circles, as any such move would affect a major block of downtown office space in the city's tallest building and the 2,200 employees who work in it. That has set off a scramble by its current landlord to keep the bank happy.
According to a city official and a source familiar with the proposal, Seneca One Realty has offered to build a smaller tower of up to 600,000 square feet for HSBC that would be attached to the main building on the northwest corner. It would come off the side of the tower, and would extend west to Pearl Street and north to Seneca Street, the sources said.
The proposal, which has been in development for a few months, could give the Virginia-based bank floors with 60,000-square-foot layouts, enabling it to create the kind of sprawling setting downtown that it could otherwise only achieve in the suburbs.
That's particularly desirable for the kind of back-office functions that dominate HSBC's Western New York operations, now that it is no longer headquartered in Buffalo.
"It's something that … could keep them from looking in the suburbs, but more importantly could bring more jobs here," said the person familiar with the plans, who spoke on condition of anonymity.
The building owner has also laid out plans for capital spending to improve the building's aging physical plant.
Seneca One has also approached city, county and state officials, including the Erie County Industrial Development Agency, about economic development incentives if HSBC renews its lease on the building, but especially if it also brings more jobs.
ECIDA officials declined to comment, citing a confidentiality agreement.
"If you're just keeping jobs here, that's one thing. If you're bringing additional jobs, that's an entirely different story," the source said. "If they were to commit to bringing another 300, 400, 1,000 jobs, I'm sure Empire State Development [Corp.] would be forthcoming with benefits."
The firm also met with Buffalo Mayor Byron W. Brown and Brendan Mehaffy, the city's new executive director of the Office of Strategic Planning.
"It was really just a briefing, to give us information about what they plan to do with the building," Mehaffy said, praising the "idea of expanding the opportunity for businesses" in downtown Buffalo. "It is the highest priority to us, retaining and expanding those jobs downtown."
Mehaffy said he could not comment on whether the city has held discussions with HSBC.
HSBC officials would not comment on the specific proposal, except to confirm that its search is under way. "The company is currently looking at a range of options, one of which is to maintain the status quo," spokeswoman Juanita Gutierrez said. "A final decision is not expected for some months."
HSBC employs about 6,000 in Western New York, including 4,000 in Buffalo — where it has several buildings — and more than 1,000 at its mortgage company facility in Depew.
But it's also consolidating its office space in New York City, where it sold its headquarters building at 452 Fifth Ave. to an Israeli firm and will be leasing back far less space than it originally had. That poses an opportunity to attract more of that work to a low-cost center like Buffalo, the source said.