IBM to sell buildings, consolidate campus

IBM's announcement that it will sell two-thirds of its 3 million-square-foot Rochester campus reflects the reality that its local workforce just doesn't need as much space after decades of reductions, observers say.

Its Rochester employment is now a third of what it was at its height 25 years ago, when it employed more than 8,000.

Still, local leaders say the Armonk, N.Y.-based technology company remains committed to Rochester, and the sale of millions of square feet of office space opens up new possibilities for the city's future.

"I see this as a positive development," said Gary Smith, president of Rochester Area Economic Development Inc. via news release. "IBM remains committed to Rochester, and consolidating their operations will make it easier for all the local divisions represented here and scattered throughout the site to effectively collaborate and work together."

IBM will consolidate its operations into eight buildings on the east side of its campus, it announced Wednesday. It will be selling the excess Rochester real estate holdings to an outside developer, according to a news release. A buyer has not been identified, but the property soon will be listed for sale.

"These moves will involve no personnel changes other than their relocation within the site, and the move should be completed by March of 2017," said Tory Johnson, vice president of supply chain engineering and senior location executive for IBM in Rochester.

IBM's employment on the campus peaked at more than 8,000 in the 1990s, but after a series of layoffs, employee transfers and attrition, it has dropped to about 2,500, according to the latest documents it filed with Occupational Safety and Health Administration. That's down from 3,224 in 2012. Many of the campus buildings were designed by famed Finnish architect Eero Saarinen.

"As part of IBM's ongoing transformation as a cognitive computing and cloud platform company, IBM in Rochester is focused on increased collaboration and innovation, creating work spaces to enable this," Johnson said.

IBM has begun to redesign and reconfigure office spaces for agile work and collaboration that can better facilitate teamwork and idea generation, the company says.

"This will drive faster innovation, create an even better environment for our employees and result in a win for IBM and our clients," Johnson said.

Rob Miller, president of the Rochester Area Chamber of Commerce, said he heard the news from a senior IBM executive shortly before it was made public. While it surprised some in the community, Miller was not one of them.

"IBM is a different company today than it was 50 years ago," Miller said. "They used to build things. I know that there are some in the community who remember the days of lots of employees … but technology changes, and I'm glad that IBM is staying on the cutting edge with their cloud-based services and Watson project.

"It looks different. Not bad different, just different."

Miller said the sale isn't worrisome. "I'm sure there are some financial drivers … but I don't think it's anything for the city to be concerned about. I actually think it should be celebrated because they're staying on the cutting edge."

In February 1956, IBM president Thomas J. Watson, Jr., announced plans to establish new manufacturing, engineering and educational facilities on the 397-acre site in Rochester, according to IBM's website. It opened in 1956 with 174 employees.

"Before the year was out, employees at the new facility already were shipping their first products. And over the next 50 years, IBM Rochester went on to develop and manufacture a rich harvest of popular products such as the System/3, System/32, System/34, System/36, System/38 and the AS/400," IBM's website says.

The most recent Olmsted County tax rolls show IBM's properties in Rochester have a market value of about $38 million.

Smith says he's working with IBM to market about 1 million square feet for sale.

While a price tag has not yet been attached to the property that will be sold for redevelopment, Miller believes it will be sold for a pretty penny due to the existing infrastructure and potential for collaboration with IBM and Mayo Clinic during the transformative years of Rochester's 20-year, $6 billion development that's been dubbed Destination Medical Center.

"You're going to get people who want to be part of that landscape who don't necessarily want or need to be downtown," Miller said. "I think it's going to be pretty attractive for somebody."

1/2: Set amid broad lawns on a nearly 400-acre site at the northwest edge of Rochester, the IBM Building offers a startling image of modernity. Library of Congress, Prints and Photographs Division, Balthazar Korab Archive.

2/2: This aerial view of IBM in Rochester was taken in 2006 and looks over Highway 52 from the east toward the west. The newer frontage road is in the foreground.