In his State of the City Address yesterday, Mayor Bloomberg struck an optimistic note, declaring that New York is still where the best and brightest want to be. As if to hammer that point home, the mayor added that he knew of no major company that was planning to leave the city.
The mayor's message was a continuation of a theme he took up earlier, when he tried to blunt criticism of his giant property-tax increase by telling a group of business executives that the city's high costs don't deter companies from doing business in Gotham.
And he ought to know, you'd think. After all, didn't he run a successful Manhattan-headquartered business?
But hold on. Look at tiny Montgomery Township, N.J., where local leaders have called together the area's major employers to help fashion a master plan for future growth. What especially concerns officials is that Bloomberg's company, Bloomberg LP, is contemplating building up to 800,000 square feet of office space to house thousands of workers. So rapidly has Bloomberg LP grown in southern Jersey that it has helped cause congestion in and around Montgomery Township.
Clearly, while Bloomberg-the-mayor now asserts New York has great "competitive advantages" for businesses, Bloomberg-the-executive seemed to operate on a very different philosophy.
True, Bloomberg expanded his company rapidly in New York City: It now employs nearly 4,000 people here, about half of its worldwide workforce of 8,000, and will soon become a major tenant in a new office building on the East Side.
But Bloomberg LP also has been one of the fastest-growing employers in New Jersey.
Starting with only a few dozen employees situated in a small office near Princeton, the company now employs 1,600 people in New Jersey, according to NJBiz magazine. At its corporate campus in Princeton, it houses financial analyst jobs, magazine and book-publishing positions, editorial and reporting staffers—exactly the jobs that have been crucial to New York's economy for decades.
Most of Bloomberg's Jersey expansion took place while the mayor was running the company, starting with a 35-person Princeton firm he purchased in 1987. Between 1991 and 1993, a period when New York City was bleeding hundreds of thousands of jobs and Manhattan office space was going begging, Bloomberg LP's Princeton staff grew to nearly 600.
By the mid-1990s, Bloomberg LP had started a publishing operation that included a book division and several magazines, one of them a personal-finance publication. It also rapidly began expanding its news service. And much of that growth took place in Jersey—not Manhattan or even Brooklyn or Queens—even though New York is the center of book publishing, the home of several personal-finance magazines and the headquarters of major news services. Bloomberg had apparently discovered what other businesses were also learning: that you don't have to be in New York City, even if you are running a "classic" New York business.
From a business perspective, one could hardly blame him. Real-estate taxes make up about $10 per square foot of rents in Manhattan office towers, compared to between $2 and $3 a square foot in Jersey. Bloomberg LP is probably saving about $3 million a year just in property taxes by having so many workers in the Garden State. And the savings will be greater now that the mayor has hiked property taxes.
But if even a company like Bloomberg LP, a high-margin business, would choose to grow so rapidly outside of New York, where does that leave the rest of New York businesses? Many of the city's manufacturers operate on thin profit margins. Small businesses, which are acutely sensitive to high costs, account for half of all jobs in the city.
Even the financial services industry is struggling to get back on its feet in New York after having lost about 15,000 jobs. But Bloomberg is growing. They've got positions open for mutual fund and fixed-income analysts—the kinds of jobs that might boost the city's finance industry. Too bad they're in Princeton.
From city-journal.org, the Web site of the Manhattan Institute's City Journal, where Steven Malanga is a contributing editor.