The new New Jersey

Manhattan transfer: Meet America's latest financial epicenter.

By Diane Seo and Suzy Hansen

Jun 26, 2000 | New Jersey -- best known for big hair, Bruce Springsteen and a congested turnpike -- is saddling up for a real outlaw role: corporate looter.

In a quietly accelerating expansion, New Jersey has lured the bluest of blue chips from New York. Today, it stands as an upstart financial enclave capable of competing with the glamorous metropolis across the Hudson.

The latest convert is none other than Chase ManhattanBank. According to sources, the country's second largest bank is about to sign a lease with the Lefrak Organization to develop two office towers in Jersey City's waterfront Newport area. About 10 percent of Chase's 20,000 New York employees are expected to lug their briefcases to the new gilded complex (though the bank's headquarters will remain on Park Avenue).

Chase Manhattan joins other defectors such as Goldman Sachs, PaineWebber, Salomon Smith Barney, Merrill Lynch, Deloitte & Touche, Morgan Stanley Dean Witter, Lehman Bros. and several other financial powerhouses, all of which have established or are pursuing outposts in New Jersey. When this Who's Who of Wall Street sets up shop over the next two years, Jersey City will be home to about 20,000 professionals, according to Tom Gallagher, the mayor's chief of staff.

The emergence of "Wall Street West" -- or as some call it, New York's sixth borough -- has put the Big Apple on alert. Manhattan may still be the world's premier financial center, but Jersey City's rapid growth is making everyone from New York Mayor Rudy Giuliani to Gov. George Pataki sweat. New York last year boosted its marketing budget from $674,000 to $4.5 million to attract and keep businesses in the Empire State, and Sen. Charles Schumer recently brought together business and community leaders to brainstorm ways to stem the bleeding.

"We've gotten the wake-up call that we have to do more," says Mitchell Moss, the group's co-chairman and director of New York University's Taub Urban Research Center. "We have to be more aggressive."

Here's the main reason for the migration: Real estate in Manhattan is simply too expensive, and space is insufficient to accommodate growth. It's about 25 percent cheaper to build in New Jersey, and prime New York office space now leases for $50 a square foot -- almost double the price in Jersey City. The Garden State also offers generous tax incentives, and developers there are completing state-of-the-art office towers in about 18 months.

In fairness, New Jersey has long had its share of impressive financial tenants. But last December, when Goldman Sachs decided to build a 45-story tower on 2.4 million square feet in Newport, many saw the firm's announcement as the bombshell that would forever change the state's destiny. After all, if the country's snootiest investment bank sees its future there, shouldn't it be good enough for everyone else?

Not quite. So far, most firms have moved only their so-called back support to Jersey -- lowly tech people, number crunchers and the like. Well-heeled investment bankers, brokers and top execs are holding on tightly to their 212 area code, and the big kahunas of the financial world adamantly maintain that they have no current plans to uproot themselves from the Street.

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