Morgan Stanley CEO Sees a Future for the Bank With ‘Much Less Real Estate’
Morgan Stanley CEO Sees a Future for the Bank With ‘Much Less Real Estate’
(Bloomberg) -- James Gorman is hesitant to make predictions about the future with so much about the coronavirus pandemic still uncertain. One thing is clear, however: Morgan Stanley will have “much less real estate.”
“We’ve proven we can operate with no footprint,” Gorman, the firm’s chief executive officer, said in an interview Thursday with Bloomberg Television. “Can I see a future where part of every week, certainly part of every month, a lot of our employees will be at home? Absolutely.”
It’s an early glimpse of the longer-term changes Covid-19 holds in store for an economy that largely has been operating under stay-at-home orders for weeks. And it could spell tough times for commercial real estate in business centers with dense populations such as London, New York and Hong Kong.
On Wall Street, open for business because finance is considered an essential service, most employees are working out of their houses, apartments or, in many cases, vacation retreats. In Morgan Stanley’s case, 90% of the firm’s 80,000 employees are working from home.
Gorman, 61, had run the bank from self-isolation while recovering from the coronavirus. He said he’s surprised that a firm as complex as Morgan Stanley has been able to function “extremely well” with so much of its workforce off site.
“That tells you an enormous amount about where people need to be physically,” he said in the interview after Morgan Stanley announced first-quarter results.
It’s too early to tell whether a wider re-evaluation of Wall Street’s real estate requirements will affect plans many firms already have for ambitious new digs. JPMorgan Chase & Co. is demolishing its headquarters on Park Avenue to make way for a skyscraper 70 to 75 stories high.
BlackRock Inc. has agreed to occupy 850,000 square feet across 15 floors at 50 Hudson Yards on Manhattan’s west side, a $25 billion development that also attracted KKR & Co. and Wells Fargo & Co. Nearby, Brookfield Asset Management Inc. is completing its Manhattan West project and as of January was close to obtaining a $1.45 billion loan for a new tower there.
Morgan Stanley, with headquarters at 1585 Broadway in Midtown, as recently as 2017 considered a move to Hudson Yards. For now, the firm’s employees can still count on being in the office at least some of the time.
“I’m still a huge fan of mentoring, bonding and having teams together and the creative surges that come from having people working together,” Gorman said.
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