Editor's Note: This story has been updated.
SOMERS, N.Y. IBM Corp., Somers’ biggest taxpayer, is leaving town; the second corporate colossus in a year to abandon its offices here and deal a major blow to municipal revenue.
The IBM decision, delivered in a truncated phone call this week to Supervisor Rick Morrissey, follows a similar move last year by Pepsico. Combined, the companies employed thousands in their Somers facilities and contributed more than $5 million annually to the town, county and school district in property taxes.
“We have decided to move IBMers in Somers to IBM’s North Castle facility,” the company said in a memo to staffers, then “sell the Somers site.” The Somers Record has obtained a copy of the memo. IBM officials could not be reached immediately to elaborate.
The technology giant’s combined property taxes in Somers last year ran to $3.6 million, the biggest single tax bill collected by the town on behalf of several jurisdictions. Pepsico, trailing only second place New York City and its abundant watershed properties, was the third biggest taxpayer at about $2 million.
Despite their empty buildings, both properties will continue to generate tax revenue, but at a lower, yet-to-be-decided level. The management company overseeing Pepsi’s 200-plus acres and nine-story office building, Murray Hill Properties in Manhattan, has reportedly started legal proceedings aimed at reducing the property’s assessment.
Less than a half-mile north of Pepsi’s leased campus off Route 35, IBM owns 700-plus acres and more than a million square feet of office space on a hilltop off Route 100, between routes 116 and 138. Designed by I.M. Pei, four iconic five-story office buildings are topped by 50-foot glass-pyramid skylights, visible from Route 684. A fifth building, four stories high, houses central services.
Built to hold 2,700 employees, the office buildings hold far fewer today, but a precise number was not immediately available.
IBM is now looking for a buyer, just shy of three decades after opening its doors here.
Saying the town had seen the handwriting on the wall, Morrissey called IBM’s move no big surprise. “We don’t live in a vacuum here,” he said in a telephone interview. “We knew the life span of IBM [in Somers] was at risk. They were mothballing buildings.”
Phone calls over two days to the IBM press office at world headquarters in Armonk were greeted with a recorded message saying no one was available.
Morrissey did not fare much better. Still deeply immersed in finding taxpaying tenants for largely vacant Pepsico offices, the supervisor said he took IBM’s call late Monday morning.
A woman Morrissey identified only as a company representative tried to convey the relocation news, but the cell-phone communication was made difficult to impossible by a bad connection. “I called her back at an 845 [area code] number,” he said, hoping to learn such things as the number of employees involved in the move, but “she said I was breaking up.” His phone calls to other IBM officials went unanswered the rest of the day, Morrissey said.
In its memo to employees, IBM said the move would be completed by next March, following “modernization of the North Castle campus.”
IBM said it will first modernize the Armonk headquarters, temporarily relocating the employees from those offices into available space in Somers, and then moving all of them into the refurbished Armonk facilities. “We have also decided to sell the Somers site,” the memo reported.
Consolidation of staffers at world headquarters mirrors Pepsi’s real estate contraction. In April, the last of some 900 employees of the bottling group were relocated from their 200-acre Somers campus off Route 35 at Route 100 to the principal corporate facilities in Purchase.
The fortunes of IBM and Pepsi have been inextricably linked in Somers since the ‘80s. Back then, a concerted effort sought to encourage major corporate relocation to a town with neither sidewalks nor sewers. It brought ambitious development plans, first from Pepsi in 1983, then from IBM a year later.
Purchase-based Pepsico built a 540,000-square-foot office tower overlooking the Muscoot Reservoir for its soft-drink bottling division in 1987. It owned the property for more than a decade before selling the site in 1998 and leasing it back. Last year, a group representing Carlos Slim, the Mexican businessman, reportedly bought the building and grounds for almost $87 million.
By late 1989, when IBM completed construction of its own megacomplex, unpleasant realities like increased traffic had already emerged. Underscoring the price of large-scale development, it cooled the enthusiasm for growth and swept pro-development officials out of elected office.
So far today, about 45,000 square feet of vacant Pepsi space—just over 8 percent of that building’s total square footage—has found potential tenants, Morrissey told a Chamber of Commerce dinner last month. Those numbers have not changed in a month, the supervisor acknowledged Monday. Now, IBM’s retrenchment has added 1.2 million more square feet in search of new corporate tenants.