After 15 years of calling the Key Center tower its home, Delaware North Cos. is considering a move to new headquarters, and executives say they're committed to staying in downtown Buffalo.
The 97-year-old global food service and hospitality company is now headquartered in Fountain Plaza tower on Main Street.
The company may not leave the approximately 100,000 square feet of space it now occupies, but executives decided the time was right to at least explore options. Its current lease, which began in 2000, expires in the summer of 2015.
"It's something that every business looks at periodically," said Chief Financial Officer Christopher J. Feeney. "It's really a process about aligning what the organization needs for the next 15 to 20 years in its headquarters. Our goal here is to get the best possible headquarters spot for Delaware North for an extended period of time."
Options range from staying at Key Center and renewing its lease, relocating to an existing site or building something new. The company could also opt to own its new home instead of leasing space.
Delaware North employs about 350 corporate workers in Buffalo, and Feeney said the property review will consider the need for added flexibility, better use of space and better integration of new technology to support the needs of its employees, "not just today, but 15 years from now." It will also consider access to transportation and roads "so folks have easy commutes," as well as "good access to parking," he said.
A decision is expected by year's end, but Feeney stressed that Delaware North is only looking within downtown Buffalo.
"We're really wedded to the downtown Buffalo area," Feeney said. "We've been a citizen of the community here. We like it, and have every intention of staying."
Delaware North's search is the latest big real estate quest to hit the Buffalo market in the last three years and is likely to garner significant attention because of the amount of space and the prestige of the firm.
It also comes as the downtown market is already reeling from several other major real estate changes, particularly among law firms and HSBC Bank USA, that have emptied or threaten to empty significant downtown space. On the other hand, those moves, combined with the steady redevelopment of the Erie Canal Harbor area into Canalside, could even pose opportunities for a firm such as Delaware North.
"At this point, we're not ruling anything out," Feeney said. "All of them are options that will be considered over time."
Founded in 1915 as Jacob Brothers, Delaware North is a global hospitality giant that provides food service and hotel, retail, recreation and transportation management services. The company runs food and hospitality services at sports complexes, airports, highway rest stops, casinos, resorts, national parks and other venues, serving more than 500 million customers in the United States, Canada, Britain, Australia and New Zealand.
The company, which is still privately owned by the Jacobs family, has annual revenues of more than $2.6 billion, with 55,000 employees. It also owns the TD Garden in Boston, home of the Boston Bruins hockey team, which the Jacobs family owns.
Feeney said Delaware North would take no more square footage than it has today but could take less depending on the layout of the building, as long as there is opportunity for expansion.
The company has hired Gregory E. Katz of national real estate brokerage firm Studley Group, which has conducted similar real estate searches in the last two years for law firms Phillips Lytle LLP and Jaeckle Fleischmann & Mugel LLP.
The Phillips Lytle law firm will move by late 2013 from 85,000 square feet in One HSBC Center to the former Donovan State Office Building, which is being renamed One Canalside, in 2013. The Jaeckle Fleischmann law firm left 40,000 square feet at the Bank of America Plaza to relocate to the Avant building, where rival Damon Morey LLP had also moved.
British banking giant HSBC Bank USA, which sold its upstate New York retail branch network to First Niagara Financial Group earlier this year, still employs more than 3,000 workers in Buffalo and occupies about 75 percent of the One HSBC Center tower. However, its lease expires in October 2013. So far, the bank has said it will stay put for "the time being," but it had previously conducted its own real estate search for a new home and is not expected to maintain as much space in Buffalo's tallest building.
Combined with Phillips Lytle's departure and the closing of the Canadian Consulate, a full exit by HSBC would leave 87 percent of that building vacant at virtually the same time, nearly doubling the amount of vacant space downtown.
But Feeney said that didn't affect Delaware North's decision. "It's just a prudent business evaluation," he said. "The fact that there's the noise out there in the marketplace didn't weigh into our decision one way or the other."