By David Henry and Herbert Lash
NEW YORK (Reuters) - JPMorgan Chase (NYSE:JPM) & Co is forging ahead with plans to build a mammoth new headquarters in New York, Chief Executive Jamie Dimon said on Tuesday, despite the coronavirus pandemic casting serious doubt on the future of office buildings.
"We're building that headquarters for 50 years! It is not a short-term decision," Dimon said during a call with reporters after posting quarterly results.
Slated to open in 2024, for a price tag of as much as $3 billion, the building at 270 Park Avenue is to house about 14,000 employees.
At 1,425 feet, it would be the second-tallest office building in Manhattan behind One World Trade Center, nearly 200 feet higher than the Empire State Building and 225 feet above the nearby Bank of America (NYSE:BAC) Tower, according to the Council on Tall Buildings and Urban Habitat.
An illustration by Lewis Garrison, a 3-D architectural illustrator who likes to make video flyovers of skylines, https://www.youtube.com/channel/UCydmhyt2iXAMmpNNVFG_EUg?view_as=subscriber envisions JPMorgan's new headquarters towering over Midtown Manhattan, a T-Rex in what might seem like a field of dinosaurs.
But since pandemic lockdowns happened in March, far fewer workers have been going into offices, making it unclear why such a big skyscraper is necessary.
JPMorgan has been showcasing new safety protocol and prodding white-collar employees to return, but New York's financial centers are nothing like they were before the pandemic. Major thoroughfares are more populated than when virus fears ran high, but the Midtown lunch crowd remains sparse.
The longer it goes on, the less temporary it seems.
Companies will need 10% to 20% less office space in a post-pandemic world, several real-estate brokerages predict. Nearly three-quarters of respondents to a Piper Sandler (NYSE:PIPR) & Co survey in mid-September said they expect to work from home more often, up from 59% in its June tally.
Only one-in-five JPMorgan employees are going to offices in New York now, Chief Financial Officer Jennifer Piepszak said. The company does not expect that to change for the foreseeable future.
JPMorgan will have a lasting shift toward working from home, Dimon said, but he doesn't know how big the change will be. The bank has as many people assigned to other New York buildings as it plans to have in the skyscraper and can adjust if necessary, he said.
"We have plenty of leeway in how we manage our real estate over time," Dimon said.
JPMorgan likely will adopt new floor plans that are less dense with larger conference rooms and perhaps more private offices, said Dennis Donovan, principal at Wadley Donovan Gutshaw Consulting. The bank will be able to do that from scratch instead of retrofitting.
It may also be part of Dimon’s legacy, a building to last beyond the time anyone is talking about his expense ratios or return on equity.
"It really is something that will endure well beyond COVID," said Jesse Keenan, a real-estate professor at Tulane University.
(This story has been refiled to correct the height comparison with Bank of America Tower in fourth paragraph to 225 feet, not 400 feet)
