There’s a standard – and not entirely humorous – piece of advice about companies. When they announce a sparkling new headquarters building that’s the time to sell the stock. There’s a certain amount of controversy over quite why things work out this way but there are enough examples of it working to make it at least reasonable to think about. So, we should think about it as JP Morgan Chase tells us they’re going to have a spanking new HQ building:
JPMorgan Chase & Co. plans to build a headquarters in midtown Manhattan that would combine other offices into a new, taller building for 15,000 employees on Park Avenue.
The 2.5 million-square-foot (232,000-square-meter) building would be the first major project under New York City’s Midtown East rezoning plan, which encourages new office construction in the area, the bank and Mayor Bill de Blasio said in a statement Wednesday. JPMorgan’s current headquarters at the same site, 270 Park Ave., is an “outdated facility” that was designed in the late 1950s for about 3,500 employees, the company said.
There is a certain reasonable logic in concentrating staff into just the one facility. And it’s also entirely true that a 1950s block isn’t going to be optimised for today’s technology. It’s pretty normal these days to have raised floors so as to be able to run all of today’s electrical and computing cabling under them, not something really thought about back then.
It will be the house that Jamie Dimon built — a soaring monument to JPMorgan Chase & Co. and, in some ways, to its longtime CEO.
JPMorgan announced on Wednesday it will tear down its Park Avenue headquarters and construct a modern tower that will mark a new era for both midtown Manhattan and the lender. The monument to the success of the largest U.S. bank will set in motion a years-long logistical feat that in all likelihood will culminate just about the time that Chief Executive Officer Dimon, 61, hits retirement.
And that’s sorta why the advice to sell when this sort of thing happens. Or at least a part of it.
For there are usually two reasons why some vast new HQ building appears. The first could be as here. A long-serving CEO finally gets to impose their ego upon the company rather than just the letterhead during their tenure. And it has to be said that ego isn’t really quite the way to run a corporation for the long term. Sure, Jamie Dimon has a great reputation at present and as far as I know at least he’s done very well given circumstances. But then that’s what we all thought about Jack Welch until well after his retirement from GE as well. A more reasonable view these days would be that he at least laid the ground rules which led to its significant loss of value more recently. An over-emphasis on financial engineering and their returns, not enough on the basic companies themselves.
The other is that the CEO has some grandiose vision which isn’t just increasing shareholder returns by the boring method of just incremental improvement. Grand corporate plans not really having a great track record of working well.
Note that there is no law about this. Moving into a new office building isn’t certain proof that disaster awaits. Just that as an observation it’s useful enough. Disaster does happen sometimes once the move has been announced. Our task is to work out why the move is happening – is it just time to have a modern office, or is there some grander and more worrisome reason?
When you see parrots flying around in the aviary in the centre of the building, that’s a good time to sell. We had a CEO who got a whole lot of trees and stuff for his aviary. Unfortunately the trees were infested with wood beetle and not only our cheap chipboard crap but his awesome solid walnut desk succumbed as well. As this was an electronic security company we all had cards we had to use to move around the building. The first half hour of the boss’s day was spent inspecting how long we’d been in the loo. Talk… Read more »
It is an observation that is old enough it is in C. Northcote Parkinson’s book. He points out that what we now know of the Vatican was built when the glory days of Papal power were long over. Although the best example must be Versailles.
Actually this is an excellent deal for JP Morgan. Rezoning has allowed it to add a ton of space to an existing site that it owns and to cut the rent bill by vacating other space. The new HQ will be an asset too.
When you see parrots flying around in the aviary in the centre of the building, that’s a good time to sell. We had a CEO who got a whole lot of trees and stuff for his aviary. Unfortunately the trees were infested with wood beetle and not only our cheap chipboard crap but his awesome solid walnut desk succumbed as well. As this was an electronic security company we all had cards we had to use to move around the building. The first half hour of the boss’s day was spent inspecting how long we’d been in the loo. Talk… Read more »
Actually this is an excellent deal for JP Morgan. Rezoning has allowed it to add a ton of space to an existing site that it owns and to cut the rent bill by vacating other space. The new HQ will be an asset too.
It is an observation that is old enough it is in C. Northcote Parkinson’s book. He points out that what we now know of the Vatican was built when the glory days of Papal power were long over. Although the best example must be Versailles.