(Bloomberg View) — The world's largest trading floor is just up the street from the train station in Stamford, Connecticut. It was built in the mid-1990s for Swiss Bank Corp., and now covers 103,000 square feet. It's also empty.
UBS Group AG, which merged with Swiss Bank in 1997, was set to move the last of its employees out of the office complex at 677 Washington Boulevard this month. The mortgage on the building is in default and for sale, with the purchaser likely to take control of the troubled property. As the Wall Street Journal's Peter Grant put it last week:
The empty trading floor has become a symbol of the end of a freewheeling era on Wall Street in which banks and hedge funds made vast sums buying and selling securities. The financial crisis prompted a wave of regulation making it more difficult for banks to trade their own capital. Hedge funds, meanwhile, retrenched.
The saga also spotlights the double-whammy that has hit the Stamford office market in recent years. First, urban downtowns like New York, with their young and creative workforces, have become more attractive to employers than suburbs and satellite cities like Stamford.
At the same time, the contraction of the financial-services industry has hit two of Stamford's biggest employers: UBS and Royal Bank of Scotland Group PLC.
So yeah, poor Stamford. The office vacancy rate there is almost 30 percent! It sure seems like a comedown from the days when writer Darcy Frey described the town like this (in Rolling Stone in 1991) :
The era of urban renewal in the 1970s brought heady times to many failing cities throughout the country, but Stamford's transformation was the most sweeping. Twenty years ago the city had no skyline. From the turnpike one saw a landscape of stone churches, weather vanes and the gold-painted domes of municipal buildings. Beyond that stood the abandoned factories and decaying tenements of a blue-collar industrial town in rapid decline. Now a new city has risen above the old, a vibrant corporate metropolis in the midst of Fairfield County's otherwise serene suburbia. More than two dozen New York corporations -- GTE, Xerox, Champion and Olin among them -- have migrated to Stamford. The metropolitan area now has the third largest concentration of Fortune 500 headquarters in the country, behind New York and Chicago. Most of the office complexes that house these companies are set on giant pedestals raised to the level of the turnpike, so that you come into town as if borne aloft, with nothing in sight but glittering buildings.
Stamford was among the most successful "edge cities" -- the new suburban office clusters that dominated development and economic growth in the U.S. from the 1970s through 1990s. One thing that made it a little different from most of its edge-city ilk was that it was built not on former farmland but in a compact old downtown with a commuter-rail and Amtrak station in the middle.
In the context of Frey's article, which was about some of the people left homeless by the city's rapid transformation (according to him, 20 city blocks full of businesses, houses and apartment buildings were bulldozed to make room for new development), that was problematic. In 2016, as Stamford reinvents itself yet again, it's kind of a blessing. Because you see, Stamford isn't withering up and dying at all. It is actually, as Connecticut-dwelling business journalist Dan Gross informed me on Twitter after I lamented the city's fate, "in the midst of a residential transit-oriented housing boom." Since 2010, it has been the fastest-growing city in Connecticut -- and will probably soon be second largest (after Bridgeport).
Being the fastest-growing city in Connecticut isn't saying all that much, given that Connecticut has been the fourth-slowest-growing state in the nation since 2010. Also, there are a couple of towns in the state that have been growing slightly faster -- notably nearby Westport, your archetypal wealthy, leafy suburb, albeit one with a nice downtown and a train station. But Stamford's 5.1 percent growth from 2010 through 2015 easily outpaced the country as a whole (3.9 percent), and even outdid "young and creative" New York City (4.6 percent). It's no South Jordan, Utah, or Frisco, Texas (the two fastest-growing U.S. cities of 50,000 people or more since 2010, with growth of 32 percent and 31.9 percent, respectively), but by Northeastern standards it's a boomtown.
Like a lot of older Northeastern cities that aren't too far from major metropolises, Stamford has been magnet for immigrants for a while -- 33.2 percent of its residents were born outside the U.S., and 42.8 percent speak a language other than English at home. Since the last recession, though, much of the growth has been provided by young professionals looking for pedestrian- and transit-friendly living that they can actually afford (and parking they can afford, too). More than 2,000 new apartments are either under construction or have recently been completed in downtown proper, and there are another 2,000-plus units in the giant Harbor Point development along the waterfront a few blocks to the south, with 2,000 more planned. Because of the massive redevelopment of the 1970s through 1990s, downtown Stamford isn't as charming as it could have been (if you want charm, go to South Norwalk, four train stops to the east). But all the redevelopment has left it a place where it's relatively easy to get permission to put up big new apartment buildings. And so it grows.
Meanwhile, Greenwich, the famously wealthy town just to Stamford's west, has actually been struggling a little. "You can't give away a house in Greenwich," Starwood Capital Group Chief Executive Officer -- and part-time Greenwich resident -- Barry Sternlicht complained in September. Following up on that remark, Bloomberg's Patrick Clark found that it depends where in Greenwich you are: "Sales are far more sluggish farther from downtown, where the homes are bigger and more expensive and the commute to Manhattan can take 20 minutes longer."
The lesson here, I guess, is that if you want to survive and thrive as a small city in the Northeastern U.S., it helps to (a) have a train station with good connections to where the jobs are (it's about 50 minutes from Stamford to midtown Manhattan by train) and (b) let developers build lots of housing near it.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
To contact the author of this story: Justin Fox at [email protected] To contact the editor responsible for this story: Stacey Shick at [email protected]
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