March 17, 2010
MARLBOROUGH — A day after financial giant Fidelity announced plans to depart, local leaders are trying to determine what the loss of 1,100 jobs will mean to the city.
“I don’t think I can quantify that yet,” Mayor Nancy Stevens said yesterday. “We just don’t know what their plans are.”
And she doesn’t expect to be enlightened any time soon.
As it shifts jobs to New Hampshire and Rhode Island, Fidelity said it plans to begin emptying its Marlborough offices in phases between July and the end of 2012. It has not said how many employees will be moved during each phase.
According to the assessor’s office, the company owns two buildings at its Puritan Way complex totaling 700,000 square feet. It also leases about 130,000 square feet of office space at 397 Williams St., on the same campus, and it as owns two parking garages and a gym for Fidelity employees.
Fidelity spokesman Vince Loporchio said yesterday the company will be looking to lease or sell the properties it owns, which combined are worth $51.8 million.
Tax incentives that drew Fidelity to expand in the Bay State don’t seem to have been enough to keep jobs here.
To encourage Fidelity to add more jobs, the Legislature passed a jobs bill in 1996 that cut taxes for businesses that increased jobs annually by 5 percent for five years.
Fidelity lived up to that, topping out at around 13,000 Massachusetts employees in the early 2000s.
State Sen. Jamie Eldridge said that over the past five years the company has cut jobs below pre-1996 levels, while still benefiting from the permanent tax cut.
“I think the legislation was poorly drafted,” the Acton Democrat said, adding that he’d support efforts to repeal the cuts. “Fidelity has met the legal requirements, but I don’t think they have followed the spirit of what we’re trying to do.”
Eldridge estimated the cuts have cost the state tens of millions of dollars over the years, and all the state and city are left with are vacant office buildings.
According to FHO Partners, a Boston commercial real estate consulting firm that tracks vacancy rates, Marlborough had 522,461 square feet of empty office space, a 20.8 percent vacancy rate, as of the fourth quarter of 2010.
Assuming the office market remains the same over the next year and a half, Fidelity’s departure will increase the city’s vacancy rate to 49 percent, according to the Boston Business Journal.
The business journal also says that Fidelity’s departure will further decrease the regional office vacancy rate, including Natick, Hopkinton and Hudson, from 15.7 percent to around 20 percent.
Regardless of the rate, Stevens said the departure of 1,100 employees is sure to have an impact on the local economy.
“If you drive past the Hannaford plaza and the Panera Bread at lunchtime, the place is packed,” she said. “I think this is going to have a ripple effect on other businesses in the community, so we want to do everything we can to restore those jobs and keep our businesses thriving.”
George Ciccone, executive director of the city’s Economic Development Corporation, said the chances of recruiting another major corporation to fill the gap are slim.
“Based on the current real estate climate and the appetite for commercial space, I think it would be very difficult to find a single user for all that space,” he said.
“Our plan is to ask Fidelity about their plans and timing,” he said, before conducting a study on the best course of action.
Like Stevens, Ciccone said he wasn’t sure when he would hear from Fidelity.
“My understanding from talking to other people here is that Fidelity has not been very forthcoming with information and hasn’t looked to establish dialogue,” he said.
Though there are many negatives to Fidelity’s departure, Marlborough Chamber of Commerce President and CEO Susanne Morreale Leeber said she sees opportunity.
“If those buildings were filled to their capacity of about 3,500 instead of the 1,100 there now, the value of the building would rise and there would be a greater benefit to the local economy,” she said.