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suburbs for downtown site

Xerox division to exit
suburbs for downtown site

Xerox Corp. has leased 80,000 square feet of downtown office space in One City Center, partially reversing a 1992 flight to the suburbs.
The company intends to use the space to consolidate operations of its information management division, which now is spread among numerous suburban office parks, said Jack Bowman, Xerox’s manager of corporate real estate for Monroe County.
Xerox plans to vacate an equal amount of suburban space, he said. Some of that space will be occupied by Dallas-based Electronic Data Systems Inc., to which Xerox has outsourced much of its internal information management.
Some 900 of 1,400 information management workers are EDS employees, Xerox spokesman Carl Langsenkamp said.
Bowman said the company expects to move roughly 350 Xerox workers into One City Center in July, after renovations are completed.
If some real estate insiders are right, the move is on the leading edge of a trend reversing five years of downtown office rentals heading in the opposite direction.
The outlying office parks are virtually full, and the trend of downtown defections to cheaper and newer suburban space is about to reverse, John Manilla, president of Pyramid Brokerage Co. of Rochester Inc., recently told the Rochester Business Journal.
Whether or not this proves to be true, Xerox’s move validates the patience of One City Center owner Pioneer Properties Co. of Rochester. Pioneer banked on the idea that if it built the 117,000-square-foot structure adjacent to Xerox Square, Xerox eventually would come.
Xerox is taking three entire floors and portions of two others in the Chestnut Street building, bringing occupancy to 100 percent.
And for Daniel Murphy of Pioneer Properties, the agreement comes none too soon.
The building was designed for large tenants occupying entire floors, Murphy said, and its proximity to Xerox was no accident.
“We always figured that sooner or later they would end up at One City Center,” he said. “It was only logical.”
Perhaps, but timing was not always on the building’s side.
As One City Center’s owner anticipated, Xerox outgrew its downtown headquarters. But in 1992, when Xerox burst out of its downtown building, One City Center had no space to offer.
Indeed, the entire building could not have met half of Xerox’s needs. The document company took some 200,000 square feet in the suburbs.
Then in 1993, two of One City Center’s largest tenants exited the building for greener, suburban pastures.
The departure of Aetna Life and Casualty Co. in September of that year left 72,000 square feet unoccupied. Earlier, the Travelers Cos. had vacated 25,000 square feet.
Both firms moved to smaller quarters in Class A suburban office parks. Both cited similar reasons: greater convenience for workers, free parking and reduced space needs due to downsizing.
Such factors were making the downtown office market a tough sell, Murphy said in a 1993 interview. He added that he might be forced to cut rental rates to attract new tenants.
The building signed a major tenant, Rochester Tel Mobile Communications. But the firm took only a fraction of the vacant space.
Pioneer Properties stayed the course, however, turning down offers from smaller tenants to lease parts of the vacant floors.
“We felt that would be a mistake,” Murphy said. “The building was designed for large tenants. If we started changing it, where would we end up?”
And the owner continued to believe that Xerox eventually would be unable to resist suitable space so close to its office tower.
Still, Murphy praised Xerox management’s commitment to downtown.
Bowman could have found suitable space in the suburbs at a lower price, he said.
“I attribute the decision to go to One City Center to Xerox’s commitment to downtown and to Jack Bowman’s determination to live up to that commitment,” he said.
Bowman said a number of factors went into the decision to take the One City Center space. Parking was a consideration. The building has its own lot and leases additional parking in a nearby city-owned garage.
But the main reason was the obvious one.
Asked whether the building’s proximity to Xerox Square was the deciding factor, Bowman gave a one-word reply:
“Bingo.”

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