Paul Weeditz, a Texaco spokesman, says the company informed its employees on Tuesday, Jan. 23 that the operations in Harrison would no longer be housed there and would be shifted to other locations if the merger with Chevron is approved. The new company, ChevronTexaco Corp., would be headquartered in San Francisco. The move out will affect 800 Texaco employees and several hundred contract workers at its Harrison offices. The combined company plans to eliminate 4,000 of its 57,000 jobs after the merger.
The companies, which first reported their intent to merge on Oct. 16, 2000, still need regulatory and shareholder approval of the deal. Weeditz said those approvals could come as early as April or as far off as October 2001.
In addition to Texaco, the 2000 Westchester Ave. property is also occupied by Atlas Air, which occupies approximately 120,000 sf, and OceanConnect.com. The amount of vacant space that would be put back on the market would total approximately 575,000 sf.
Kenneth Krasnow, regional managing director for Cushman & Wakefield's Connecticut/Westchester operations, notes that the building has the prestige to attract significant interest.
"This product is sexy enough to draw people from all over the region," he says, Krasnow notes that despite a slowdown in activity in the region that begin late last year, there are still large users from Connecticut and New York City that would find the Texaco property attractive.
He adds that he would expect asking rents at the building to average in the low to mid $30 range, significantly cheaper than rents in New York City. Across the border in Stamford, CT, asking rents are in the mid $40 range for class A space. While Texaco officials have not made a decision on what it will do with the property once it vacates, Insignia/ESG's Dean Shapiro predicts it will likely put the property up for sale.
"Usually, when a company decides not to occupy a building, it will then look to get it off its balance sheet because its core business is not real estate," he says.
Shapiro agrees with Krasnow that the property could provide Westchester with another option for large space users looking for less costly alternatives. "I think Texaco is a stellar property and it has 135 acres. I think the highest and best use for this property would be to wait for the large tenant," Shapiro says, noting that the Fairfield County office and New York City markets are more expensive and are currently very tight, especially for available large blocks of space.
"Any company that is looking for a large block of space has to look at Westchester if they are looking at existing space," he adds. He concludes that although the loss of Texaco will be difficult, "It may actually be a positive for the market."
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