The owners of Buffalo’s tallest building are making preparations for the anticipated massive exodus at One HSBC Center – perhaps a partial conversion to condos or apartments – when primary tenant HSBC Bank USA announces it’s departure.
The New York City-based partnership known as Seneca One Realty LLC is bringing in experts from the national Urban Land Institute for a panel discussion and study of best possible uses for the 850,000-square-foot tower – at 38 floors, the tallest nongovernment building in upstate New York. The study will be at least partly funded by Buffalo Urban Development Corp., an economic development agency.
Officials are still hoping the bank will keep at least some if not most of its employees and space in the building, where it currently leases 22 floors and 653,000 square feet of space, or about 78 percent of the building. But they’re also being practical in assuming the worst.
“We’re keeping our eyes open and moving ahead,” said Stephen P. Fitzmaurice, chief operating officer of Seneca One, who said he just reached out to ULI Wednesday night with possible dates for a visit.
No decisions have been made about what path to take, but ULI’s help “would allow us to focus on what would be the potential ways that our building would be best able to prosper going forward,” he said.
That could include condominiums, apartments or hotel rooms, although Fitzmaurice said a residential conversion would cost four to five times as much as refurbishing the space for another office user. So tax credits could be critical. “It’s pretty involved,” he said.
Still, that may make sense, especially given the uncertainty in the economy and the local real estate market. “It’s probably a far better, more diverse source of revenues,” he said. “If the office market went south for some reason, we wouldn’t have all of our eggs in one basket.” Ultimately, Fitzmaurice said he didn’t know how the building would fare after an HSBC departure. There’s speculation about whether the owners could put the building into bankruptcy to reduce the debt. The current loan calls for a $75 million balloon payment in January 2015.
“It’s not the end of the world. We still feel this building has great bones, and there’s great possibilities for it,” he said. “We have had a fair number of inquiries, as a result of the notoriety we’ve gotten with this.”
Western New York is anxiously awaiting an announcement by HSBC about its plans for space for its 3,000 local workers. The bank, which employed about 5,000 before it sold its upstate branch network, credit card business and mortgage operation, stunned the region in 2010 when it said it might not stay in its namesake tower. Its lease expires in October 2013.
“We’re always having discussions, but they haven’t been in a position where they could share anything concrete,” Fitzmaurice said.
HSBC has not said when it will make an announcement about their plans. But HSBC Bank USA President and CEO Irene Dorner held a routine conference call with her senior managers this week and indicated all employees will be leaving the tower by next October, according to a bank employee who was briefed on the call.
Where all of the employees would go is less clear. Some of those employees, estimated at more than 2,000 at one time, could move to the nearby Atrium building, which HSBC owns and has spent several million dollars recently to upgrade and expand from its former capacity of 1,100 workers to 2,000. The bank also leases its sprawling mortgage facility at Walden Avenue and Dick Road in Depew, where it will soon have significant empty space after transferring its mortgage business to PHH Corp. And HSBC, like other large companies, has been encouraging more employees to work remotely, from home.
Bank spokesman Robert Sherman declined to comment on anything discussed on the internal management call, and would not speculate about the timing of any announcement to employees or the public. He said the bank is actively planning for its real estate needs and has committed to tell employees when it has more specifics. But he said there has not been any employee notification.
“We currently do not have any updates related to our real estate requirements,” he said.
Kevin Quinn, senior vice president, head of corporate banking for upstate New York, the bank’s top executive in Buffalo, also declined to confirm the information, saying only that employees were “not authorized” to speak to the media. “The information that you’re alluding to is stemming from a senior management call, which is confidential information,” he said. “We’ll have a public announcement in the very near term.”
News Staff Reporter Stephen Watson contributed to this report.