- Morgan Stanley unveiled plans for a Dallas hub employing about 3,800 people, consolidating several businesses from around the metro area into a 709,000 square foot Uptown tower. Filings with the city indicate the $1.3 billion building could eventually hold as many as 4,800 jobs.
- Public support totals as much as $62.3 million. The project receives a $43.8 million economic development grant from the state of Texas, on top of up to $18.5 million in incentives offered by the Dallas City Council in June, when Morgan Stanley said it was also considering Alpharetta, Georgia. That works out to roughly $16,000 per announced job.
- The cluster is dense. Goldman Sachs is constructing a $500 million office complex less than a mile away, and Bank of America will anchor another Uptown tower whose tenants will include the Texas Stock Exchange, a new venue positioning itself against the New York Stock Exchange and Nasdaq.
- The pattern extends beyond Texas. JPMorgan said earlier this year it plans to add hundreds of jobs in Boston after taking space in a new tower there, as banks expand footprints in US cities outside New York.
What Happened?
Eric Grossman, chief administrative officer at Morgan Stanley, said in a joint statement with Texas Governor Greg Abbott that the firm is establishing Dallas as a strategic hub to serve clients and attract talent.
Why It Matters?
What is being built in Uptown is a financial cluster rather than a back-office relocation. A major wealth manager, an investment bank, a universal bank and a challenger exchange are all committing to the same few blocks, and clusters of that composition tend to become self-reinforcing because talent, service providers and clients follow one another. For a wealth management audience the Morgan Stanley move is the most significant, since the firm derives the bulk of its revenue from wealth management and consolidating client-facing businesses into Dallas relocates part of the industry centre of gravity. This corroborates FDIC data showing Dallas led all large metros in bank office growth at 1.57% over the year to June while New York fell 1.06%, Chicago 0.83% and Boston 1.93%. The incentive arithmetic deserves plain treatment. Roughly $62 million of public money for 3,800 announced jobs is about $16,000 per position, and Morgan Stanley strengthened its negotiating position by publicly considering Alpharetta, Georgia during the process. That is ordinary site-selection practice, and taxpayers in both jurisdictions bear the cost of the competition. One figure warrants a second look before it is repeated: $1.3 billion for 709,000 square feet implies roughly $1,830 per square foot, which is far above typical Dallas office construction costs, so the number likely covers land, fit-out and longer-term commitments rather than the building alone. For commercial property investors the read is that prime Sunbelt office is attracting committed corporate capital at a moment when office in several coastal markets is not.
What Next?
Watch whether Morgan Stanley headcount moves toward the 4,800 figure in city filings rather than the 3,800 announced, since the gap indicates how much further consolidation is planned. The Texas Stock Exchange launch is the item with the broadest implications, because a credible third venue would affect listing economics for Nasdaq and the New York Stock Exchange, and its physical placement alongside three major banks is not incidental. Track which firms follow, as clusters attract further entrants and the announcements to date span wealth management, investment banking and retail banking. On the property side, watch Uptown Dallas rents and vacancy as this space delivers, and compare with New York, where the same institutions are not expanding. Delivery timelines and whether the announced jobs are new positions or transfers from elsewhere are the details that determine the actual economic effect.
Affected Tickers and Coins: MS, GS, BAC, JPM, NDAQ, ICE
Source: Bloomberg
