Reader’s Digest to leave Chappaqua campus for White Plains and NYC
November 20, 2009
by Susie Pender
In an announcement to Reader’s Digest employees on Wednesday, November 18, President and Chief Executive Officer Mary Berner stated that the company would leave its leased space in Chappaqua at the former Reader’s Digest campus, now called Chappaqua Crossing, and consolidate its employees in White Plains and Manhattan.
“While these plans are preliminary and are subject to Bankruptcy Court approval, we will shortly notify the Court of our request to enter into leases for two new spaces. . . at Westchester One, 44 South Broadway, White Plains, New York, and Grand Central Square, 750 Third Avenue, New York, New York,” her memorandum to employees explained.
“Westchester One will accommodate 525 of our 650 employees and contractors currently [at the former Reader’s Digest campus.] Grand Central Square will consolidate our Manhattan offices providing office space for 175 New York-based staff as well as about 125 employees currently [at the former Reader’s Digest campus in Chappaqua.] It will be designated as our new corporate headquarters,” the memo continued.
Reasons for the move
According to the memorandum, one identified motivation for this move was the opportunity to capitalize on the depressed rental market.
The announcement appears to have taken Reader’s Digest’s current landlord by surprise.
“As of 5:00 p.m. today, Reader’s Digest had not notified the landlord that this had happened,” commented Geoff Thompson of Thompson & Bender, spokesperson for Chappaqua Crossing owner Summit Greenfield, on Thursday, November 19.
Bender continued: “The announcement was given to employees, and it made its way into the public sector, and that’s what happened. By the end of the business day [Thursday] there had been no formal notification to the landlord. Nothing had happened yet under Chapter 11 proceedings with the $20 million [or more] lease held by Reader’s Digest.”
The negotiations between Summit Greenfield and Reader’s Digest
“At the beginning of October Summit Greenfield began talks with Reader’s Digest in which Summit Greenfield aggressively sought to keep Reader’s Digest [at Chappaqua Crossing.] They pushed hard to keep them here. They were very aggressive on the rent, but Reader’s Digest apparently made up its mind it wanted to leave no matter what. And we know, because in a bankruptcy they have to file a lot of papers telling what they’re doing, that they’re moving from space here that costs them $23 per square foot to space in White Plains where they’ll pay $27 a square foot and to Manhattan, where they’ll spend $36 a square foot.” They will be leasing less space than that covered by their lease at Chappaqua Crossing.
Thompson noted that the White Plains space Reader’s Digest is renting is split among three floors, two of them served by one elevator bank, the third by another. “They’ll argue that they’ll be saving money,” said Thompson.
“Mary Berner, CEO at the Digest, said she wanted to be back in Manhattan. They’re going to the Conde Nast building, where she used to work,” he added.
Impact on New Castle
“It really is a sad day for the property and for the community,” Thompson said. “They’ll make the case that it makes economic sense. And it poses serious issues to the town. We have three tenants and we’re building up Northern Westchester Hospital now, but according to the town’s zoning, one tenant has to be 225,000 square feet. We have to find a really big tenant, and you know what? That’s not out there. So some real discussions have to take place now between the town and Summit Greenfield about what we’re going to do.”
Thompson suggested, “Maybe now we’re in the soup together. Circumstances are now unexpectedly quite different for the town, Summit Greenfield, the school district, the neighbors, for everyone. The building is there, the tax needs are real, the owners want to make money and the neighbors don’t want too much impact. The world is really changing. We’re all in the same churning water more than we ever thought we were going to be. That will be a challenge in a different way for everyone who has a vested interest in this.”
Reaction from Town Supervisor Barbara Gerrard
In response to an inquiry by NewCastleNOW.org, Town Supervisor Barbara Gerrard issued the following statement regarding Reader’s Digest’s move: “The Town of New Castle regrets the departure of the Reader’s Digest community from their Chappaqua headquarters of 70 years. The much-admired architecture, especially the famous Pegasus, has long been a symbol of the Town’s major corporate entity. And of course that corporate entity has been the source of many careers and positions over the years.”
Gerrard continued: “Watching the business decline over the last several years, the Town continued to hope it would develop a more profitable model that would enable it to regain some of its former corporate strength. However, this continued economic downturn, with recovery still more theoretical than real, resulted in Reader’s Digest filing bankruptcy in August. The fact that they will no longer be renting office space from Summit Greenfield, the current owner of the real property, clearly presents difficult issues. By New Castle’s zoning law governing the property, Summit Greenfield must rent at least 200,000 square feet of office space to one tenant. That requirement was met by Reader’s Digest. No other tenant currently occupies that large an area, and the Town will be reviewing its legal options to resolve this issue in a fair and productive way. The Town Board has stated how much we value this small but important commercial base of our community. It is important to all that that base not be eroded.”
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