Tag Archives: HSBC

Naming Rights Tower

6 Dec

What the imminent emptying of the tower-soon-to-be-formerly-known-as-HSBC-Tower underscores is that Bashar Issa wasn’t just a charlatan, but a transparently obvious one. Here is our archive of what we’ve written about Issa over the years. 

Now that HSBC, Phillips Lytle, and the Canadian consulate are vacating Buffalo’s tallest building, what is to be done with it? It seems that the building’s owners should have seen the writing on the wall as far back as a few years ago, but seem to be caught without a plan “B”. To the Buffalo News, Seneca One Realty explains that it’s bringing in the Urban Land Institute to help it decide what to do with 38 empty stories’ worth of building at the foot of Main Street. 

One more vacant office building creates a sudden and dramatic glut of not-quite-class-A office space that will likely depress values throughout downtown Buffalo. For all intents and purposes, it joins the I-190 as a wall that separates Buffalo’s waterfront from its downtown. 

Now, more than ever, it’s time to consider transforming downtown into a sales tax-free zone in order to stimulate economic activity there


The Morning Grumpy – 5/8/12

8 May

All the news, views, and filtered excellence that’s fit to consume during your morning grumpy.

Credit - Sarah Emerson @Society6

1. If you think there will be bank operations in the HSBC Tower in downtown Buffalo in 2014, I’ve got a new Peace Bridge to sell you. HSBC is slowly selling off operations and business units and there isn’t much left to keep them in Buffalo at this point. This is a big deal and the incremental reporting on these sell-offs seems to be tamping down the regional concern.

It looks like the mortgage service center in Depew will soon be closed.

The 172,630-square-foot building at Walden Avenue and Dick Road, which HSBC leases, has a total of about 1,000 employees, but about 320 of them work for other parts of the bank, supporting commercial and other lines of business that are not connected with the mortgage unit. Brazil said the bank does “intend to remain in that building for the time being,” but he wouldn’t say how long that may be or how long the lease is for.

As HSBC sells off business units, sheds employees, and relocates teams to various locations around the country, we’re quickly approaching a day when Buffalo’s largest office building will be nearly empty, possibly within two years. The giant suckhole you hear forming is the coming collapse of the downtown commercial real estate market accompanied by the massive hit to regional morale when the tallest building in the city goes dark.

Is anyone working on a plan? I’d tell you what the Mayor is doing about it, but I haven’t received a callback from anyone working in the administration for nearly 10 months. I’m sure he’s busy figuring out how to fuck up the outer harbor.

Is the council doing anything?  They’re still bickering over which kickboxer or turtle enthusiast will replace Mickey Kearns in the South District.

So, no.

2. The 1% are delusional.

Some unknown but alarming number of ultra-rich Americans are now basically totally delusional and completely divorced from reality. This is now an inescapable fact, confirmed by multiple media accounts of billionaire thought and an entire special issue of the New York Times Magazine.

Here’s a brief list of insane things that are apparently common knowledge among the billionaire class:

  • That President Obama and the Democratic Party have treated wealthy finance industry titans maliciously and unfairly.
  • That the fact that they are perversely wealthy and growing richer during a period of mass unemployment and staggering debt is a sign that the economy is functioning correctly.
  • That poor people, and not the finance industry, are responsible for the financial crisis and subsequent recession.
  • That the ultra-wealthy are wealthy because they are smarter and work harder than everybody else, and that they are resented for their success.
  • That the ultra-wealthy in general, and finance industry executives in particular, are the victims of widespread prejudice akin to that faced by ethnic minorities.

The most fascinating thing to me is that they are able to convince a sizable chunk of Republican America that these things are true.

3. Stephen King is filthy rich and he wants to be taxed more…damn it!

Mitt Romney has said, in effect, “I’m rich and I don’t apologize for it.” Nobody wants you to, Mitt. What some of us want — those who aren’t blinded by a lot of bullshit persiflage thrown up to mask the idea that rich folks want to keep their damn money — is for you to acknowledge that you couldn’t have made it in America without America. That you were fortunate enough to be born in a country where upward mobility is possible (a subject upon which Barack Obama can speak with the authority of experience), but where the channels making such upward mobility possible are being increasingly clogged. That it’s not fair to ask the middle class to assume a disproportionate amount of the tax burden. Not fair? It’s un-fucking-American is what it is.

I don’t want you to apologize for being rich; I want you to acknowledge that in America, we all should have to pay our fair share. That our civics classes never taught us that being American means that — sorry, kiddies-you’re on your own. That those who have received much must be obligated to pay — not to give, not to “cut a check and shut up,” in Governor Christie’s words, but to pay — in the same proportion. That’s called stepping up and not whining about it. That’s called patriotism, a word the Tea Partiers love to throw around as long as it doesn’t cost their beloved rich folks any money.


4. The House GOP introduces a budget to fix America. Holy shit, this thing is a doozy. The “Sequester Replacement Act” authored by House Budget Committee Chairman Paul Ryan slashes social programs while increasing defense spending. Do the Republicans know it’s an election year?

Fully one-fourth of the House GOP spending cuts come from programs directly benefiting the poor, such as Medicaid, food stamps, the Social Services Block Grant, and a child tax credit claimed by working immigrants. Federal workers would have to contribute an additional 5 percent of their salaries toward their pensions, while people whose incomes rise after receiving coverage subsidies under the new health care law would lose some or all of their benefits.

The budget-cutting drive is designed to head off a looming 10 percent, $55-billion budget cut set to strike the Pentagon on Jan. 1 because of the failure of last year’s deficit “supercommittee” to strike a deal. The Obama administration and lawmakers in both parties warn the reductions would harm readiness and weapons procurement, and reduce troop levels.

The House Appropriations Committee bill released Monday includes $519.2 billion for the fiscal 2013 base budget and $88.5 billion for Afghanistan and other counterterrorism activities. That’s $1.1 billion more than the current level and $3.1 billion more than Mr. Obama requested.

To recap, the Republicans drove the American economy to the brink of global collapse last summer during the debt ceiling negotiations, agreed to the Super-committee idea, submarined that effort, and now wish to take away Grandma’s Meals on Wheels program to fund Israeli missile programs and high altitude unmanned aerial vehicles?  The GOP plan would cut food stamps for 2 million people and reduce the same benefits for 44 million others. Nearly 300,000 school children would lose free school meals and hundreds of thousands could lose their Medicaid or CHIP coverage. GOP 2012! 

5. The media is bored with the #Occupy movement, which means we’ll be hearing a lot less about income inequality, the gender wage gap, corporate greed, corruption, and other inconvenient truths.

As a new report indicates, Occupy has been central to driving media stories about income inequality in America. Late last week, Radio Dispatch’s John Knefel compiled a report for media watchdog Fairness and Accuracy in Reporting (FAIR), which illustrates Occupy’s success: Media focus on the movement in the past half year, according to the report, has been almost directly proportional to the attention paid to income inequality and corporate greed by mainstream outlets. During peak media coverage of the movement last October, mentions of the term “income inequality” increased “fourfold.”

The movement helped set the tone for President Obama’s renewed focus on these issues as the re-election campaign ramped up and helped him demonstrate a semblance of a backbone when dealing with Republicans these last few months. However…ta

As mentions of “Occupy Wall Street” or “Occupy movement” waned in early 2012, so too have mentions of “income inequality” and, to an even greater extent, “corporate greed.” The trend is true for four leading papers (New York Times, Washington Post, USA Today, Los Angeles Times), news programs on the major networks (ABC, CBS, NBC), cable (MSNBC, CNN, Fox News) and NPR, according to searches of the Nexis news media database. Google Trends data also indicates that from January to March, the phrases “income inequality” and “corporate greed” declined in volume of both news stories and searches.

The national media tells most of America what to be concerned with at any point in time. Once they pull the plug on the attention or outrage machine…*POOF* we no longer give a collective shit. Looking for followup stories on the BP Oil Spill? The Haiti earthquake? Japanese tsunami? Etc.? You’ll have to wait for the anniversary of the event for a quick look on the nightly news and maybe, if we’re lucky, an overwrought and emotional human interest piece on one of the morning shows.

Fact Of The Day: Scientologists warn that reading the Xenu story without proper authorization could cause pneumonia.

Quote Of The Day: “You get what you get and you don’t get upset” – My 3 Year Old Daughter, Josie

Video Of The Day: “Islam, the Quran, and the Five Pillars All Without a Flamewar: Crash Course World History #13” – Crash Course, A brilliant YouTube channel

Laugh Of The Day: “Muffins” – Bill Burr

Song Of The Day: “Cool Jerk” – The Capitols

Follow me on Twitter for the “incremental grumpy” @ChrisSmithAV

Email me links, tips, story ideas: chris@artvoice.com

Hitting the Banking Sweet Spot?

3 Aug

I sure hope I was wrong. Could an unmitigated calamity really morph into the best of all worlds? If I could set aside my prejudicial cynicism, maybe I could see that the answer is yes. And yet . . .

In May I discussed a number of bad options for HSBC’s sale of their retail banking network in Upstate New York. Option one, which I offered as the most negative, was a division of the 195 branches among local players and the elimination of the backoffice, support and leadership functions in the main HSBC tower and associated atrium. Option two, the preferred option to me, was for a banking giant new to Buffalo to sweep in and buy the lot, necessitating the establishment of a regional headquarters and the support jobs that go with it. My hoped for suitor was Toronto Dominion (TD), as it would both connect their US East Coast network with the home base in Toronto, and continue the local strategy of encouraging Canadian business investment in Buffalo. Such a local footprint, by TD or other new player, would be smaller than HSBC’s currently but preferable to piecemeal dissolution. As a side benefit, it would also remove a potential suitor from swallowing the acquisition-ready First Niagara.

The comments from that May article, from several local banking types, former and current HSBC employees, and knowledgeable laymen, ranged from optimism that HSBC would retail its global banking operations in Buffalo (despite the sale of the retail network) to vented frustration that much of HSBC’s leased space is empty already, and its just a matter of time before Buffalo’s jobs are in Chicago or New York.

It was not that long ago that Buffalo was near the center of the banking universe, albeit briefly, as HSBC, M&T and First Niagara all made international financial news simultaneously. Both of my options indicated that run was at a quick end.

Flash forward to Sunday’s headline news that seemed to present a Goldilocks Option Three that I did not consider. First Niagara will buy HSBC’s retail bank network in upstate New York and Connecticut and retain “most” jobs. HSBC Holdings will cut 30,000 internationally but none locally. The 3400-ish workers in the HSBC tower and atrium will continue to support worldwide finance for an international banking power. Control and profits of 195 retail branches will shift to local good news story First Niagara. Jobs will be retained. In fact, the situation is arguably better than the status quo, as a local company grows and becomes more difficult to acquire. The politicians gushed at the news.

Governor Cuomo:

Given the possible losses from the HSBC divestment in New York, this is the best possible outcome for HSBC’s employees and branches across the state. In addition, this purchase is good news for New York, because First Niagara is a New York company that has a record of growth and creating jobs in upstate New York and with this deal it is showing that it is poised to continue and expand this important commitment to our state and our work force.

County Executive Collins:

I don’t want to put words in his mouth, but what he [First Niagara CEO Koelmel] said to me is we don’t need to worry about those jobs in the branches. From my perspective, it’s as good as it can be for Western New York with a locally owned bank acquiring those branches.

Everything worked out as good as it possible can, right? It’s not too good to be true, is it?

Hang on a minute.

It did not take long for fine print to be read, logic to take over, and reality to set in. There was no way First Niagara could keep the entire HSBC branch network. Regulators would snatch off pieces for anti-trust reasons, and simple logistics and geography would force the closing of more. On Grand Island, HSBC and First Niagara are nearly across the street from one another; on Transit Road they share a parking lot. Such a scene will be played out across WNY. So, out of those 195 branches bought, how many will First Niagara actually keep?

“Half” is the answer we got Tuesday. In fact, First Niagara may resell more branches than it keeps. Suddenly Goldilocks Option Three looks a lot more like my Option One. Evans, Warsaw, and other smaller banks will each get their chance after all. If the branch jobs are going to be retained, it won’t be by First Niagara. Such platitudes turned out to be a wish, not a plan.

What are we left with? HSBC stays in its tower, but more tenuously – it now has no more tie to the area than GEICO and Citi. First Niagara has grown but pledged to stay in Larkinville. Such a move is good for restoration and revitalization efforts, but perhaps it also indicates how much they plan to grow at the uppermost level – there is limited space in those relatively full offices, even after the U Building is restored and occupied. First Niagara’s growth may reduce the chance of outside acquisition; the number of banks that can afford them has shrunk. At the same time, they may now be large enough to appear on the radar of the biggest threats. The financial markets are not impressed with First Niagara’s plan to dilute share values further (to be fair, the markets aren’t happy with anything now during the debt ceiling mess). If the share price drops, First Niagara may look more tempting to take over, not less.

Hopes Dashed

26 May

And so may end 161 years of waterside Buffalo banking. It was apropos that HSBC’s much anticipated big announcement on the Webster block was a surprise reorganization, potential sell-off and withdrawal from Buffalo all together. Here in Buffalo our eventual, seemingly mandated, disappointment is only matched by our brief fiery optimism before the fall. Before we hoped for a mixed retail/business Canalside anchor, a new ten story building filling an empty parking lot. That dream has tumbled to a new reality of thousands of jobs in jeopardy. Sounds about right for Buffalo. The Chicago architect designing the HSBC Webster options can file their drawings next to Ciminelli’s waterfront hotel.

When considering HSBC’s realignment options, I think the stakes for Buffalo, and our overall powerlessness to affect the situation, have actually been under-reported and under-stated. Following a now familiar Buffalo path, Marine Midland Bank rose to prominence long enough to build an iconic albatross, and then sold out to oversees interests. Bethlehem Steel dwindled to ArcelorMittal too before finally expiring and leaving millions of square feet of rust on our waterfront. HSBC was Buffalo’s window to a global financial world. It helped make us an international city on the top playing field. HSBC’s acquisition of Marine Midland in some ways looked like a validation of our financial strength – we produced something desirable by a banking giant. Now, slow and steady for 20 years, even through the Great Recession, is not enough to be worth the bother. Detroit is still mentioned as an HSBC hub. Buffalo is labeled an “under-performer.”

Seven months ago, when considering HSBC’s potential move of back office operations to Chicago, I made the following prediction:

Buffalo is so far out of its league in this competition, it is merely the pawn in a larger game. . . When HSBC moves 4000 jobs to suburban Chicago, it will be a surprise ambush on the front page of the paper, with no foresight of the bomb possible. . . . All of the sound and fury of the Mayor and Common Council, Erie Canal Development and the Webster Block, may in the end signify nothing.

The bomb dropped, and it was unexpected. Mayor Brown drips goodwill about working well with HSBC. County Executive Collins is “on pins and needles.” Neither are Big Time enough for the HSBC leaders who will make this decision to even know their names. What will happen, will happen.

And what is that? HSBC is Buffalo biggest deposit holder, a relic of its Marine Midland history, with 71 local branches, and 184 throughout Upstate. The worst case scenario for Buffalo is that HSBC’s upstate holdings are liquefied piecemeal. First Niagara will fill in its footprint in several communities. Key Bank will do the same in a few targeted locales. M&T likely buys zero. Evans, Financial Institutions, and Warsaw each buy a couple. Local Albany and Syracuse banks pick up the rest. But in a shrinking community and a saturated banking market, 71 local branches become 40, and 184 upstate branches become 120. Of the 5000 local HSBC jobs, the 3200 in back-office operations largely disappear (First Niagara doesn’t need to hire many more to handle ten more sites), and the 1800 at local branches become 1000. Four thousand jobs lost.

If Buffalo is lucky, we get the New Haven deal. Seven months ago I also noted TD Bank as a possible snatcher of First Niagara, if John Koelmel didn’t get FNFG’s stock price up quick enough. Jon Epstein in the Buffalo News also lists TD Bank as a possible suitor, and we could do far worse. TD has offices along the East Coast and across Canada, but no footprint to connect the two. The Canadian dollar is strong, and Canadian companies are taking advantage of buying American assets. Buffalo is recruiting Canadian companies aggressively, and TD could find a worse place to put significant US back-office operations. It was only a couple weeks ago David Robinson was crowing HSBC wouldn’t move their jobs because our low labor costs are so favorable. If TD snatched up the upstate HSBC network, we could see the retention of most branch jobs, and perhaps half the back-office ones as well. TD becomes the largest bank in WNY, and First Niagara’s head is off the chopping block for at least one possible acquirer.

1600 jobs lost and a more stable First Niagara – that is Buffalo’s best day.

Banking Built in Buffalo

7 Oct

When Buffalo was the eighth largest city in the country, full of captains of manufacturing and industry, it occupied a position of attention for the world. Do you wish you knew what that felt like, current resident of the echo? Well, you do, today, as the spotlight is now on Buffalo’s banks. And if you are anxious and confused, I don’t blame you.

For different reasons and with different motivations, HSBC, M&T and First Niagara are all currently in the national and international headlines (of the financial industry publications, at least). All three are on the cusp of growth and the revival of Buffalo . . . or a spectacular crash and hollowing out of one of our city’s few thriving business sectors. Let’s take them one at a time.

M&T Bank’s murmurs of acquisition and take over have been the most cryptic, but also now the least threatening. Most reporting of the on-again, off-again talks between M&T and Spanish banking giant Banco Santander involved M&T’s acquisition of Sovereign Bank, creating the 15th largest bank in the US, or a Top 10 bank, depending on how you count. The talks broke down because Santander, while dumping its under-performing subsidiary Sovereign, was really interested in acquiring M&T. How could this happen? Because for M&T, the talks were never about Sovereign or expansion, but how to best find a home for 22.5% of the company’s stock currently owned by Allied Irish Bank.

Confused? When M&T acquired Allfirst Bank and moved into the mid-Atlantic in 2002, it did so by purchasing the bank with M&T stock. The major stake holder in Allfirst at that time was Allied Irish Bank, and during Ireland’s Celtic Tiger phase, Allied Irish probably seemed like a safe place for one fourth of the company’s stock. M&T and Allied Irish took seats on each other’s boards, and M&T’s international profile grew. Unfortunately Ireland’s economy has fallen hard, and Allied Irish has been mandated by the Irish government, as a condition of its bailout which will give the government near total ownership and control of the bank, to dispose of its entire stake in M&T by the end of 2010.  

This causes problems for M&T. Fortunately, Wilmers and crew have control issues, and have built in agreements as to the disposition of their shares. They could arrange a sale to one single entity, but not everyone has a couple billion lying around they don’t know what to do with. They could let Allied Irish do a fire sale, but flooding the market with M&T stock would severely depress the price. Or, they could mix the purchase into another deal – i.e. the Sovereign acquisition. M&T would buy Sovereign with M&T stock, while simultaneously, Santander would buy the 22.5% stake. This would give Santander over a 51% stake in M&T, and thus control. Buffalo can be thankful Wilmers has the chutzpah to demand continued control of a company that he and his crew would no longer own – on that issue, talks broke down.

M&T fears of a diluted stock price were well founded. Allied Irish has just announced they are selling off their stake in several big chunks to investors hand picked by M&T. Still, M&T’s stock is down 10% since the news of Allied Irish’s stock disposal plan was announced, and nearly 20% since merger talks ceased. In the end, however, M&T will be left the same as it was, and well capitalized enough to continue to make small acquisitions in the future, if it desires.

Moving on to HSBC, Chris Smith does an excellent analysis of the internal pressures and politics there, involving power centers in Chicago and New York. Buffalo is so far out of its league in this competition, it is merely the pawn in a larger game. Any local tradition or loyalty to Marine Midland is nearly extinct, and few even call the hockey arena by the wrong name (a la Pilot Field). When HSBC moves 4000 jobs to suburban Chicago, it will be a surprise ambush on the front page of the paper, with no foresight of the bomb possible. Buffalo is at HSBC’s mercy to either consolidate Upstate New York functions in downtown Buffalo (big win for WNY and the New York HSBC office) or move the functions to the data center in Chicago. All of the sound and fury of the Mayor and Common Council, Erie Canal Development and the Webster Block, may in the end signify nothing. Buffalo’s white knight and champion in this proceeding: Chuck Schumer – watch for the press releases of his frequent calls to Niall Booker, HSBC-North America CEO.

First Niagara’s position may look strong to the casual observer, but it is actually the most tenuous. If M&T’s position is driven by the Irish and EU banking collapse, and HSBC is subject to internal politics, First Niagara is susceptible to the most common and old-fashioned of publicly traded company ailments: low stock price. Initially expanding as good opportunities arose (it was only 3 years ago little First Niagara bought smaller Great Lakes), First Niagara is now in a vicious buy-or-be-bought cycle.

CEO John Koelmel is under tremendous pressure to get the stock price up from the $11-$14 range, where it has been languishing for years. As he told the Buffalo News in August: “If we can’t get the stock price to $16, $18, $20, I won’t be in this job much longer.”

Profits are rising at First Niagara, but so are the number of company shares as they use proceeds from stock issuances to buy into Upstate New York, Pennsylvania, and now, New England. Despite endorsements from Kramer on CNBC based upon the size of First Niagara’s dividend, Wall Street is skeptical, and the share price has continued to slide since the announced NewAlliance deal. No matter how fast First Niagara buys smaller banks, it can’t seem to grow into increased per capita profitability. Can First Niagara get ahead of the curve, and finally drive up profits internally, and thus its share price, to stay viable? Or will TD ( a potential Top 10 bank suitor with new manned kiosks in the Buffalo Airport and a swath of branches up and down the East Coast, but none inland in New York and Pennsylvania) step in and offer $17 a share? Once that happens, First Niagara will finally “maximize shareholder value” and achieve its price goals by being bought itself.

Of the three, M&T’s position is the most solid and definitive. Buffalonians can thank Wilmer’s for his stubborn streak; it is currently the deciding factor in M&T’s continued local presence and independence. HSBC’s actions will be decided by the Fates, and beyond any local control. For me, the most worrying of the three is First Niagara: the precedent (Empire, Gold Dome) exists locally (not to mention nationally) for a quick flame out, and its roots are least deep. When Wall Street stock price pressures are finally too much, there is little to anchor First Niagara to its new Larkin digs, or the city it has called home for less than two years.

HSBC – Canalside or Bust?

6 Aug

Last night, after several hours of shuttle diplomacy between the 2nd and 13th floors of City Hall, the Buffalo Common Council unanimously voted to sell the Webster Block to the Erie Canal Harbor Development Corporation.  The ECHDC will now  make the property available to HSBC Bank as it considers its options for a future home for their retail bank management operations.

The property was conditionally sold to the ECHDC for the sum of the appraised value, $3,320,000 with the proceeds of that sale to be equally distributed amongst the nine commercial districts and the Citywide Fund, pending the use of the property by HSBC for its professional/administrative and/or back office functions.  If HSBC does not acquire the property (with a site selection letter sent to the Mayor and Council) for its use by January 1, 2011, or a later date agreed upon by the Mayor and the Common Council, the agreement will be terminated and the property will revert back to the City.

Now that we’ve dispensed with the formalities of reporting, lets get into why this all went down in the first place.

It all began in 2002 when HSBC Holdings purchased Household Financial Corporation (Headquartered in Chicago, IL), a consumer lending company and one of the most profitable sub-prime lenders in the industry for $15.5BN.  Prior to that purchase, HSBC was a major global player in Corporate, Investment Banking and Markets (CIBM), wealth management and distributed, but limited retail banking operations.  Household made money hand over fist during the boom years as the lender of choice for consumer retailers and by giving high risk adjustable rate mortgages to poor people.  You might also recall Household being fined nearly $500MM for predatory business practices prior to their purchase by HSBC.

The Household purchase did not go so well for HSBC.  When the sub-prime bubble burst, HSBC was holding the bag on over $20BN in defaulted loans and wrote off over $51MM in loans every day in 2008.

HSBC has emerged from the crisis with a more robust balance sheet, but there is still tension in the ranks of HSBC management between former Household executives and HSBC executives who were on staff prior to the purchase.  The Household executives have gone about centralizing operations into their Chicago offices while HSBC executives have sought to centralize operations in NYC.

Caught in the middle are cities like Buffalo, where the bank has significant operations, but lacks the executive presence of NYC or Chicago as the headquarters of HSBC Bank USA, N.A. moved to NYC from Buffalo in 1999 after HSBC purchased Republic Bank.  This is a global corporation with several holdings, including Hang Seng Bank Limited, HSBC Finance Corporation, HSBC USA (HBUS), The Hongkong and Shanghai Banking Corporation Limited, HSBC Bank USA, N.A., and HSBC Holdings, plc (the mothership). What I’m getting at is that this isn’t simply an issue of a US bank dealing with the City of Buffalo. This is one of the world’s largest, most tentacled and complex organizations.

Essentially, without much local executive oversight, most if not all, of the operations managed from the Buffalo facility can be managed anywhere.  This makes the people and lines of business in Buffalo a chit to be fought over by divergent forces in the bank.  Over the course of the past several years, bank sources tell us that issues with asbestos, mold and the general age and condition of One HSBC Center have reinforced the desire of bank management to evaluate other options for their operations.  They currently lease over 75% of the available 1.2MM square feet within the building and have concerns with the long term viability of landlord Seneca One Realty and maintaining a presence in what they deem to be a sub-standard building.

The bank retained Jones Lang LaSalle to review its location options and issue the RFP for HSBC’s location selection when their lease at One HSBC Center expires in 2013.  Several local options emerged and slowly leaked out to the press over the past month.  Perhaps a waterfront location, perhaps the Webster Block, perhaps a new companion tower at One HSBC Center, perhaps Crosspoint in Amherst…all options were bandied about, but sources at the bank and with the city tell us that HSBC only had eyes for the Webster Block.

Sources within HSBC in Chicago tell us that they had been interested in the Webster Block option because the ECHDC could allocate the property for their use after the Canalside land transfer agreement was passed last week.  The bank would then not have to deal with a public process for their move, avoid any debate with the Common Council and receive a prime piece of property on which they could build a new facility next to their Atrium complex and build a parking garage.  When the Canalside land transfer agreement was derailed by Bass Pro pulling out of the project and the Common Council’s unwillingness to transfer the land to the ECHDC without a Community Benefits Agreement, it became an “emergency” to find another way to transfer the Webster Block for HSBC’s consideration.  The bank had previously set a deadline to make final site selection recommendations by Friday.

However, the underlying battle is not where in Buffalo HSBC will put their employees, but if they will stay here at all.

There is significant pressure inside the bank to relocate the Buffalo operations to HSBC facilities in the Chicago region, including offices in Chicago’s Financial Loop, Mettawa, and Vernon Hills.  HSBC has made no guarantees that they will choose to stay in Buffalo, they have simply added the land on the Webster block to their palette of options.

Over the next six months, every politician in New York will make a visit to the management office of HSBC in New York City and Chicago to offer them the moon in exchange for staying in Buffalo.  The loss of 6,000 jobs in Buffalo would be a near extinction level event for this region.  In an election year, everyone will want to share in the glory of saving those jobs and holding one of the shiny gold shovels at the groundbreaking ceremony.

If we get that shiny new building in Canalside for HSBC, what of the tallest structure in Buffalo?  I guess progress can now measured in empty buildings and the avoidance of job losses.

Shit, it’s been a rough week, hasn’t it?

Canalside 2, Electric Boogaloo

4 Aug

In about an hour, the Buffalo Common Council will be meeting to discuss the latest Canalside emergency.  Evidently, the council needs to transfer city owned portions of the proposed Canalside district to the ECHDC immediately or HSBC Bank will consider a relocation outside of Buffalo.  WNYMedia will be covering the meeting live on Twitter with the #buffcouncil.  I’ll post a full summary of the meeting later and there will be coverage  tonight from our TV partner YNN and I’ll be live with Brad Riter on our radio partner WECK1230 after the Yankees game (5PM).

I’ll reserve comment on how ECHDC is now acting as if they were chartered like the ECIDA and instead focus on the possible outcomes.

1.)  Council agrees to the Mayor’s proposed Community Development Agreement (a “compromise” proposal as opposed to the Common Council proposed Community Benefits Agreement) and the land is transferred to ECHDC.  HSBC is then offered property (with incentives) to relocate 300 yards down the street to Canalside from One HSBC Center and Phillips Lytle will be given the Donovan Building.  This leaves the tallest building in Buffalo empty, perhaps forever.  After all, the building needs capital intensive updating and renovation, which will be hard to complete without tenants.  Also, how many companies in Buffalo can fill even half of the 38 floors and sprawling side buildings?  Ummm, HSBC, that’s about it.

2.)  HSBC is offered the Canalside property but they choose stay at One HSBC Center.  The ECHDC takes the land they want in order to recruit a new anchor tenant for Canalside without providing the Common Council the input they desire into the selection and planning process.

3.)  HSBC is offered the Canalside property yet chooses to vacate the Tower and build a new complex in Amherst (rumored to be Cross Pointe Business Park off the 990).  One HSBC Center goes dark, they choose not to stay in the city and several thousand jobs leave our urban core…making investment from a new Canalside anchor tenant less likely.

None of these options are “double plus good” and each result leaves more questions behind than answers.

This action by the ECHDC could be the “Red/Green Budget: Development Edition”, an epic miscalculation which can change the face of a region irrevocably.

So, let’s see how this strong arm tactic works out, if nothing else, it’ll be fun to watch the FAIL circus set up today at the Common Council.


4 Aug

The completion of the decade-long Bass Pro courtship has suddenly resulted in a flurry of Canal Side related activity.  Instead of talking about new retail jobs, we’re talking about preserving existing ones.  HSBC has shifted a lot of work out of Buffalo, and the city is scrambling to keep what we already have.  HSBC’s lease in its eponymous tower is up in 2013, and they’re talking about what they want.

On Tuesday, Mayor Byron Brown called an extraordinary emergency session of the Common Council for Wednesday to debate and vote on whether the city will transfer the Webster Block (the parking lot in front of HSBC arena) to ECHDC as part of a deal to keep HSBC in downtown and enable it to expand its operations.  

But some city lawmakers continue to balk at anything where “community benefits agreement” doesn’t appear in the same sentence as “Canal Side”. Even with Bass Pro long gone, some continue to demand a CBA, which would require jobs at Canal Side to pay a “living wage” – about $10 – 12/hr, depending on whether the employer offers health insurance. The state minimum wage is $7.25.

I imagine that HSBC is very good at paying a living wage, thanks, and on its face that shouldn’t be a sticking point here.  Furthermore, as an inducement for their votes, Mayor Brown has offered up $1MM per common councilmember to spend in each district as they see fit.

But there’s no current guarantee that the Webster Block will actually go to an HSBC-related use, and what if *gasp* Cabela’s or something else ends up in there without a CBA in place!?

In this instance, there is a very real potential that the city will sacrifice real & existing, well-paying, white-collar jobs on the lofty principle of guaranteeing a set of less-crappy wages for hypothetical, future jobs.

Hypothetical emergencies aside, I guess the first “tenant” for Canal Side’s “mixed-use” project will be HSBC, and possibly even Philips-Lytle.  There seems to be a lot of panicky brinksmanship going on with the Common Council, and perhaps everyone should take a deep breath and figure out what’s really going on with respect to HSBC.  It’s sometimes like we pivot from emergency to emergency, and each time the patient dies on the operating table.