Xerox to leave downtown offices, relocate employees to Webster campus

Xerox is leaving downtown Rochester.

On Friday, the company announced it would relocate all of its employees from Xerox Square to its Phillips Road campus in the town of Webster by the end of the year.

The transition will be staggered throughout the year as new workspaces are readied, and Xerox will be out of the building completely before the end of 2018. Xerox is the building's only tenant.

Xerox spokesperson Bill McKee said there would be no layoffs related to the move. He could not provide an exact number of employees who worked in the high-rise building but said it was "several hundred."

The move comes after the company negotiated an early termination of its lease.

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Xerox sold the building to Buckingham Properties in 2013 for $40 million. At the time of the sale, 1,400 Xerox employees worked in the tower. Xerox leased back several floors of office space after the sale. Under the original agreement, that lease was set to run through 2021.

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"The move will reinforce our commitment to the region by aligning our employee resources on one campus," McKee said. "By relocating our employees to Xerox-owned facilities in Webster we will move them into our owned facilities, versus leased space. This transition will allow us to have all of our Monroe County employees on one campus."

Robert Duffy, president of the Greater Rochester Chamber of Commerce, says the move makes good business sense for Xerox.

"Shifting those employees to Webster will certainly impact downtown," he said, "but we'll work hard within the downtown business community to fill that space. The most important thing is that these men and women are going to be in Webster and not leaving the area."

Finding companies looking to fill that kind of office space will be a challenge, as the need for traditional office space has dropped in the region, said Heidi Zimmer-Meyer of the Rochester Downtown Development Corporation.

That said, downtown has undergone a sea change of real estate development, brought about by savvy developers looking to transform city property into residential or innovative business space that is attractive to the current market, she said. The economy has diversified at the same time, which has helped mitigate the losses from the contraction of Rochester's Big Three companies (Kodak, Xerox and Bausch + Lomb).

“The landscape is changing very dramatically,” said Zimmer-Meyer. “We have dozens of small or mid-size companies that cover a much broader range of economic sectors.”

About $2.2 billion has been invested in downtown since 2000, which includes projects now built and occupied, plus what’s in the pipeline, she said. Also, 1.65 million square feet of office space has been converted to housing in downtown since 2014.

In looking at all of these trends, Xerox leaving downtown isn’t as big of a blow as it would have been decades ago — “We are waking up in 2018 in a very different environment,” Zimmer-Meyer said.

Xerox continues to be an important part of Rochester's economy, said City of Rochester spokesperson Jessica Alaimo.

"The City of Rochester will continue working with RTS (Regional Transit Service) and other partners to ensure that relocated employees will be able to fully access their jobs," Alaimo said in a statement. "Xerox Square will remain a significant part of our Center City and it is important that it continues to be viable."

Some downtown business owners said Friday that their business might suffer from the departure of Xerox workers. But with an increasing number of downtown employers, the impact won't be catastrophic.

Andrew Vaccaro, head chef at the Winter Garden Café across the street says the move would probably impact the store's traffic during the morning coffee crowd.

"It might take a toll, but I think there are enough workers in the area to keep us busy,” he said.

A block away on Court Street is Di Pisa Old World Submarines, a popular lunchtime spot for Xerox workers.

"Hopefully it won’t be too big of a hit,” said manager Mickey Barnhart. "But when somebody new moves into their space, we hope they'll come over and check us out."

The fact that Xerox seems to be consolidating its workforce in Webster is good news for the businesses in that community, said Matt Chatfield of the Webster Economic Development Alliance.

The Webster campus lost hundreds of jobs when Conduent moved its operations from the Phillips Road campus to the old Macy’s building at Skyview on the Ridge in Irondequoit, but now it is essentially gaining those back, he said.

“It sounds like a wash from the numbers, but I think it’s a win for us,” he said. “We’re excited that Xerox is recommitting to Webster.”

Webster remains the company’s largest global location, with more than 5 million square feet of office, manufacturing, lab and warehouse space. The campus encompasses 600 acres of land and approximately 50 buildings.

Xerox employs about 36,000 globally and 3,400 in Monroe County, said McKee.

“With occupancy at Xerox Square at less than 50 percent, it makes economic sense to relocate employees to available space that we own in Webster,” said Xerox CEO Jeff Jacobson.

The 30-story tower opened in 1967 and at 443 feet remains the tallest building in Rochester. Its dark concrete presence has loomed over the downtown skyline ever since. It served as the company's world headquarters until 1969.

Known for most of its life as Xerox Tower, the 2.7-acre downtown property includes an adjacent four-story auditorium, a two-story annex and an underground parking garage.

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STADDEO@Gannett.com

SLAHMAN@Gannett.com

Includes reporting by staff writer Meghan Finnerty