Financial Services Firms Find Appeal in New Jersey Cost Structure
When the conversation turns to a prime location for global financial services companies, with increasing frequency the accent is on New Jersey.
Trading on its proximity to Wall Street, availability of a skilled workforce, lower business costs and superior communications infrastructure, New Jersey has become a destination of choice for financial services headquarters, major operation centers and data facilities.
More than 246,000 people work in the state's financial services sector, where long-time corporate citizens such as Prudential Financial Inc. have been joined by heavyweights such as Goldman Sachs & Co., whose 42-story Goldman Sachs Tower in Jersey City is the state's tallest building.
Prudential Financial is a global provider of a variety of financial services, including the Prudential Insurance Company of America, one of the largest life insurance companies in the United States. The company has called Newark home since it was founded there in 1875. About 8,000 people work either in Prudential’s main office in Newark, or at one of its campuses for various business lines in Roseland, Woodbridge, Millville and Parsippany.
“We’ve always been committed to New Jersey – it’s part of our DNA,” says Prudential spokeswoman Gabrielle Shanin.
Prudential has plenty of company in New Jersey. The gleaming office complexes found in locales such as Jersey City and Hoboken offer easy access to Manhattan but at a lower cost for real estate and easier commutes for workers.
One such company that has made the move is SCS Commodities Corp. Founded in 1991, SCS is now the largest independent floor and over-the-counter energy brokerage service across multiple markets including NYMEX, CME Globex, ICE and the DME. The firm moved its operations from New York to Jersey City in spring 2011. SCS took advantage of a $2.7 million grant from the state’s Business Employment Incentive Program (BEIP) to help fund construction of a new headquarters for its brokerage and trading floor.
Evan Marya Soufarapis, SCS office manager, says the company chose to relocate to be closer to many of the financial firms that have their operations in New Jersey. And the move also made good business sense.
“More than 50 percent of our employees live in New Jersey, which makes commuting much easier,” Soufarapis says. “Everyone here is committed to supporting the New Jersey economy.”
Standard Chartered Bank: 'Cost and Quality'
In 2008, London-based Standard Chartered Bank moved its back-office operations team from its Americas headquarters in Manhattan to Newark.
“The main deciding factor was the commercial real estate cost and quality – the real estate cost is less than half of Manhattan,” says Matthew Millett, managing director and chief operating officer for the firm’s Americas operations. “It is also much cheaper for everything else and easier to get things done.”
A $4.2 million BEIP grant helped encourage Standard Chartered, as well as support from the city of Newark, Millett says.
Attracting Big Name Players
The state also in making a name with financial service firms such as Citigroup Inc., UBS and Societe Generale. Depository Trust & Clearing Corp. has committed to bring 1,600 workers to 450,000 square feet in Jersey City's Newport Office Center, in close proximity to its customers in the New York metro area, by 2013. DTCC, provides clearance, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives.
The company cited a number of advantages that New Jersey offered, including competitive costs for a long-term lease and access to highly skilled financial and information technology workers.
Data centers that serve the financial services industry have found New Jersey to be an advantageous locale, and not just because of availability of state-of-the art fiber optic networks and lower real estate and construction costs compared to New York. The centers' proximity to Manhattan-based clients helps reduce so-called latency delays, minute fractions of seconds that it takes computers to communicate across vast distances.
A Draw for Data
The state has seen a surge of major data operation development, including a center in Mahwah that processes all the North American trades handled by the New York Stock Exchange's parent company. In Seacaucus, a 338,000-square-foot Equinix Inc. facility houses the primary computer “matching engines” that pair buyers and sellers for Jersey City-based stock exchange Direct Edge. Equinix, a global provider of data center services, has three other New Jersey operations.
And beyond cost considerations and technology advantages, New Jersey offers other benefits for financial services companies.
Shanin of Prudential notes that Newark is a transportation hub, with both a major airport and public transportation, making it easy for employees to travel for business and to commute from all areas of the larger metropolitan region. The state also boasts world-class universities from which to draw recruits, including Princeton and Rutgers, the State University of New Jersey.
Moreover, Prudential’s employees can choose from a broad range of affordable housing, in a variety of settings – urban, suburban or even rural farmland just a short commute away, Shanin says. The area has abundant culture, and major sports teams play in New Jersey, including the Giants and Jets NFL football teams, the Nets NBA basketball team and the Devils NHL hockey team.
“In our business, our main asset really is our employees, and so in order for us to attract and retain the kind of top talent we need, quality of life is very important,” she says. “New Jersey really is a Garden State.”