Monday, Aug. 28, 1978

Bedroom to Board Room

Headquarters--and headaches--in suburbia

When a big company packs up and flees Manhattan's high taxes and other irritations, where is it most likely to move its headquarters? The answer, surprisingly, is not some place in the Sunbelt but just 30 miles or so away, Connecticut's Fairfieid County. Long famed as tony bedroom communities for high-paid commuters to the corporate canyons of New York City, such towns as Greenwich, Darien and Westport have become boardroom communities for many of those same bosses: they have brought their offices closer to their homes.

In 1968 Fairfield County was the headquarters for only four companies on the FORTUNE 500 list. Now there are 24, tying Fairfield with Chicago for second place, behind New York City (82), as a corporate address. Before long the county will move ahead of Chicago: Union Carbide, the Continental Group Inc. (formerly Continental Can) and Singer Co. have announced plans to move in.

The chief boon for the companies has been higher productivity. Staffers are still close enough to Manhattan to run in for a Broadway play but are spared the drudgery of daily commuting. They no longer wander in late because of railroad tie-ups, and they tend to stay to clean up the day's work rather than flee at the stroke of 5 p.m. to catch the next train. Some firms have even been able to lengthen their formal work week. The Olin Corp., whose 1969 move from Manhattan to Stamford led off the exodus to Fairfield County, cut its lunch period from one hour to half an hour; Union Carbide, which now works its employees seven hours a day in New York City, will adopt an eight-hour day next year when it moves to a site near Danbury.

The firms report that their shift to suburbia has also made it easier to recruit executives from other parts of the country. Champion International relocated in Stamford (pop. 108,000) partly because it wanted to bring in managers from Cincinnati and St. Paul, Minn., and found that many resisted a move to New York. Similarly, Union Carbide Executive James C. Rowland cites "Middle America attitudes" about city problems as a reason for that company's move to Danbury (pop. 60,000). Says he: "We think Danbury will always be more like the area that we are recruiting people from."

Fully half the companies that have moved to the county have settled in Stamford, which has changed from a dingy factory town into a showcase for imaginative corporate architecture. General Telephone & Electronics occupies a striking tower, shaped like an inverted pyramid, that has helped to transform a once decaying downtown section. Champion International's offices in the 21-story Landmark Tower overlook buildings forming a complex that includes a sunken plaza used for tennis in the summer, skating in the winter. Continental Oil, Xerox, Texasgulf and General Signal are in High Ridge Park, which, with six modern buildings set on 40 acres of lawns and woodlands, is an archetypal corporate "campus."

The effect of the headquarters migration has shown up dramatically in real estate inflation. In downtown Stamford, office space now rents at Manhattan rates: $17 to $23 a foot. Housing costs have soared, partly because so many moneyed people are looking for shelter and partly because real estate taxes are lower than in New York's neighboring Westchester County. In Greenwich, a four-bedroom house that sold for $80,000 in 1968 goes for $200,000 today. Rising housing costs are lessening the financial advantages of working in Connecticut. But they are still substantial because the Nutmeg State has no income tax, while New York has both state and city taxes; the state tax rate on incomes of more than $30,000 is $2,760, plus 15% of anything above. Fantus Co., a relocation consultant, estimates that an executive in the $40,000-to-$50,000 range in Connecticut may enjoy about 8% more take-home pay than he would in New York City.

For lower-level employees, following the firm out to the suburbs can be onerous, involving a daily "reverse" commute from the city or a hard search for affordable housing. For this reason, companies are sometimes accused of leaving New York City for racist reasons, even though some of the firms have increased their minority employment. The percentage of blacks and Hispanics working in office and clerical jobs at Olin, for example, has risen from 13% to 16%. Minorities account for a fifth of Stamford's population, and, says Champion International President Andrew Sigler: "We are lined up twelve-deep to hire every black kid who gets out of high school."

As the county fills up, it is developing some of the problems that the companies moved there to escape. Partly because of rising traffic congestion, Greenwich has placed tight limits on how much land can be zoned for business use, and Darien has imposed a moratorium on commercial construction.

Moves of big-company headquarters are steadily getting harder to arrange--and more expensive. Union Carbide went to Danbury partly because it could not find enough land at a reasonable price nearer New York City. The company expects to pay up to $40 million just in moving expenses for the 3,250 employees that it will transfer starting next year. Despite--or because of--its distance from New York, the company expects to find the Big Apple umbilical hard to cut. The firm will spend $2.25 million for a pair of twelve-passenger Sikorsky S-76 helicopters to ferry executives to and from the New York airports and appointments in Manhattan.

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