Time was, major corporations were rooted in a single city for decades, if not centuries.
Those days are over, veteran commercial broker Robert Motley said, reflecting on Monday’s announcement that Subway was leaving Milford for Shelton and Miami.
“Companies, they are fungible, they move around,” said Motley, the senior commercial broker for Cushman & Wakefield in the New Haven region. Subway’s decision is not surprising as corporations shift their priorities along with their real estate portfolios, he said.
Motley was not involved in the Subway move.
Increasingly, larger corporations with multistate and international operations are shifting their bases of operations to reflect strategy and the desires of senior management, Motley said.
“Just because you’ve been in the same location for 35 years does not create certainty that you’ll be there for another 35 or even 10,” he said.
In recent months, equipment-maker Caterpillar announced a move from Illinois to Texas, Aerospace giant Boeing said it would move its corporate headquarters from Chicago to Arlington, Va., and Raytheon Technologies said it would also relocate to Arlington from Waltham, Mass.
Subway is somewhat unique only in its announcement of both a relocation and the establishment of two new corporate centers: Buried in the last paragraph of Monday’s statement was the news that Miami would become its “second headquarter location.”
Among major companies that maintain two headquarters are Eversource – with headquarters in both Hartford and Boston – and Amazon, which announced in 2018 it would operate from three bases: Seattle, New York and hotspot Arlington, Va.
Miami makes sense as a second HQ for Subway because it is the home of the company’s current CEO, John Chidsey. Soon after Chidsey took over at the sandwich chain in 2019, Subway announced it was moving 10% of its workforce to the Sunshine State. Now all “customer-facing” operations will be based there and Connecticut is listed as “franchise headquarters.”
Subway’s move from Milford to Shelton and Miami is expected to be complete by spring of 2023, the company said in a statement.
Aging infrastructure
Located in the leafy southwest corner of Milford, Subway’s current headquarters occupies a 87,345-square-foot building at 325 Sub Way that was erected in 1988 and has a replacement value of about $7.2 million, according to city property records.
On a recent weekday afternoon, the parking lot at the building was only about half-full. A training center and other buildings with Subway signage surround the HQ, just down the road from a relic of another company once based in the state – an outpost of the GE Credit Union. (GE moved its corporate base from Fairfield to Boston in 2016.)
Even a not-so-old, 1988-vintage building could be costly and time-consuming to renovate to meet the standards of modern workers, Motley said. And building a new headquarters from scratch in a time of inflation and supply-chain issues would likely be time-consuming and prohibitively costly.
Even so, workers are increasingly demanding more home-like workspaces as well as added amenities, important bargaining chips in a tight job market.
Enter R.D. Scinto, Inc., the developer that has transformed a section of Shelton off Route 8 into a showcase of corporate towers with the latest in management and amenities. Subway signed a lease for 90,000 square feet at 1 Corporate Drive, the flagship tower at the heart of Scinto’s Enterprise Corporate Park.
“I work with landlords all day long, office landlords, and they do a good job,” Motley said. “But Scinto takes it a notch or two even higher.”
Subway’s 15-year lease also allows the company to shift strategy down the road, Motley said.
“When you lease space, it gives you operational flexibility,” he said. “You have the ability to be agile and nimble and change your approach to business as the economy and your business changes.”
Contact Liese Klein at lklein@newhavenbiz.com.
