Tuesday, June 4, 2013
The electronics manufacturer is abandoning suburban Secaucus for a brand new, environmentally friendly building in downtown Newark.
Mayor of Newark, New Jersey Cory Booker and Panasonic North America CEO Joe Taylor.
FORTUNE -- Panasonic is joining the growing list of companies, such as United Airlines and Sara Lee, that are leaving their suburban office parks and moving to the city.
The Japanese electronics giant is relocating its North American headquarters from Secaucus, N.J. to downtown Newark, N.J. It plans to move approximately 1,000 employees to the new $200 million office tower in the middle of July. The 12-story, 410,000 square-feet building is located a block away from Newark's Penn Station, which allows Panasonic to take advantage of a lucrative tax incentive package for companies that locate near mass transit.
Panasonic will receive up to $102.4 million in tax breaks from the New Jersey Economic Development Authority's Urban Transit Hub tax credit program, which requires it to not only be situated near a transit hub but also bring 250 jobs to Newark by 2016 and an additional 200 jobs within 10 years.
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Panasonic's North American CEO Joe Taylor says the search for a new headquarters began in 2010, three years before the lease in Secaucus was set to expire. Management shortlisted approximately 40 sites across the country, including existing Panasonic facilities in the suburbs near Atlanta, Chicago, and San Diego.
Building an environmentally friendly headquarters was a top priority for Taylor, hence the need for a city like Newark, which had access to mass transit. "We wanted to be the No. 1 green electronics company in the world by our 100th anniversary in 2018," says Taylor. "If you're serious about being green, you can't have 1,000 of your employees driving in cars to work every day."
At the time, Panasonic was struggling financially, so moving to an existing facility to keep costs down made more sense. However, Taylor says he was aware that many current employees would be displaced if the company moved too far away. In the end, Taylor says it was easier to build a green building from the ground up. The new tower will be LEED certified and outfitted with Panasonic's own green technology such as solar powered devices and energy-efficient lighting.
Getting Panasonic to move to Newark is a major coup for mayor Cory Booker who along with New Jersey governor Chris Christie was instrumental in convincing the company to stay within the state. "We have a very assertive governor and visionary mayor in Booker," says Taylor. "Those two guys did a terrific sales job on me."
At a press conference announcing the move, Booker said, "Panasonic's arrival demonstrates a confidence in our city, in our workforce, in our infrastructure, and in our future. This is a monumental moment for Newark -- a true milestone in our city's rebirth and revitalization."
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Not everyone was happy with the new development. Upset over the loss of a major employer in the region, Secaucus officials -- along with the company's former landlord Hartz Mountain Industries -- filed an appeal to overturn the tax award saying it was misused to shift jobs away from Secaucus. The appeal was later withdrawn, but Taylor says he understands why the residents were upset. However, Secaucus just wasn't an option. "We couldn't do a green building, and we couldn't have mass transit, and I would hardly say that Secaucus is a town in transition." He says the move could have a much more positive impact in Newark, a city plagued by high unemployment and crime rates.
There was also criticism that the state was paying too much to keep Panasonic from leaving, which Taylor says isn't true when you consider the benefits. "Even after the $102.4 million tax break, the state would net a total of $223 million," he says. "Just moving 1,000 people into the city overnight could create delicatessens, dry cleaners, and a whole infrastructure that would convince other companies to take a chance on this place as well."
Pete Kasabach, executive director of New Jersey Future, a non-profit land planning and policy organization
says Panasonic's move will be good for Newark since it'll build momentum. "You're creating momentum that changes perception, it starts to change the tone of being downtown," says Kasabach. "Pretty soon other companies are going to think about opening offices here too since it already has a national headquarters."
