BY: Justin Good and Allan Lynch, Cushman & Wakefield | Thalhimer, Raleigh, NC

On July 31^, 2014, ULI Triangle hosted a panel to discuss the recent MetLife deal, which resulted in MetLife bringing its “GTO” headquarters to Cary, the addition of 1,300 high-paying jobs, and the construction of a new build to suit campus in Weston by Highwoods.  The panel discussed the site selection process from the perspective of MetLife, the local government, the broker, and the land owner.   The panelists included:

• Ken Atkins, Director of Economic Development, Kilpatrick Stockton, and Former Executive Director of Wake County Economic Development and Vice President of the Raleigh Chamber of Commerce
• Brian Brtalik, Senior Vice President, Office Tenant Representation, Cushman & Wakefield / Thalhimer
• Thomas “Skip” Hill, Vice President, Highwoods
• Geoff Lang, VP & General Manager Global Technology & Operations, MetLife

SITUATION

In early 2012 under the leadership of new CEO Steven Kandairian, New York-based MetLife, the largest life insurer in the U.S., began a significant site selection process in an effort to reduce operating costs by as much as $600 million.  A key piece of the proposed cost-cutting initative was to build a standalone Global Technology & Operations (GTO) headquarters, and MetLife was considering several national markets.  The new GTO headquarters would be home base for 1,300 technology employees and MetLife planned to fill 85% of the positions with new hires from the local talent pool.

MetLife’s goal was ambitious; and GTO leaders like Geoff Lang knew that success hinged on the insurance giant’s ability to fill nearly 1,100 positions with locally-sourced and highly-skilled technology workers such as IT risk managers, web developers, data scientists, and engineers.  Acknowledging the success many tech firms have had attracting and retaining top talent, Lang and his colleagues believed establishing a collaborative and enthusiastic culture was paramount to recruiting success.  GTO also favored the highly-amenitized office campuses occupied by many of its competitor companies.

 COMPLICATION

In addition to a high caliber labor force and a collaborative culture, MetLife – a global company with more than 90 million customers worldwide—needed to maintain the utmost levels of confidentiality during the site search and company leadership made the decision to engage Cushman & Wakefield | Thalhimer as its real estate advisor.

Globally, highly-skilled IT workers have been in short supply and many markets with sufficient depth of talent lack the cost-cutting attributes that MetLife executives were looking for.  To assist wtih the site selection decision and also with economic incentive negotiations, MetLife engaged KLG Advisors (KLG) as its location consultant.

The winning metropolitan area must have a sophisticated IT workforce that is also deep enough to support a sizable new employer entering the market, and sustainable enough to produce home-grown talent.

KLG, a New York-based consulting firm that specializes in site selection and economic incentive negotiation, has an excellent track record in the Information Technology industry.  Notably, KLG was also the site selection firm responsible for guiding Fidelity, Credit Suisse and NetApp to the Research Triangle Park and had developed an excellent rapport with local economic development officials like Ken Atkins who quietly began to coodinate potential economic incentives with state and local officials.

RESOLUTION

In 2013, MetLife announced that it had selected Cary as the new location for the GTO group headquarters and its 1,300 highly-paid technology workers.  Impressively, the average salary across all 1,300 jobs will be $112,000 per year, which is more than double the Wake County average.

The decision to locate in North Carolina was influenced, in part, by an economic incentive package potentially worth up to $100 million subject to combined job creation milestones between the GTO headquarters in Raleigh and the new MetLife retail financial hub in Charlotte, which was announced simulataneously with the GTO news.  The winning state’s two metropolitans where the MetLife offices would relocate, had work together to develop a package to meet the needs of both the GTO and financial hubs, otherwise neither city would be awarded the MetLife deal.

In its capacity as site selector, KLG was able to initiate conversations with the brokerage community which ultimately led to Brian Brtalik with Cushman & Wakefield|Thalhimer.  Brtalik knew that confidentiality was key, but he and the Thalhimer team in Raleigh were able to quietly leverage relationships to open discussions with Skip Hill at Raleigh-based office REIT Highwoods Properties, Inc. under the code name “Magellan.”

Fortuitously, Highwoods had been holding 40 acres of prime lakefront property along Weston Parkway in Cary for a significant project that set up perfectly a MetLife a build-to-suit.  The property is minutes from Raleigh-Cary’s booming technology clusters, and just 10 minutes from NC State University which annually graduates 400 students with degrees in computer science.

MetLife was considering other existing real estate options including the Sony Ericsson campus, but MetLife felt strongly that they wanted to create their own brand identity rather than making such a big bet in someone’s “old space.”

On July 22, 2013 MetLife entered into a 427,000 square foot pre-lease with Highwoods on a two-building campus build-to-suit.  Highwoods wanted the exterior consistent with their master plan in the area, so Highwoods gave MetLife the “highly amenitized office campus” that they had wanted (if feasible) from the outset.

In a testament to the Highwoods team and their investor patience, the office REIT had wisely turned down several deals over the years before being in the right place at the right time to land the MetLIfe build-to-suit.  Certainly a huge win for all parties, but it is difficult to disagree with the closing remarks of Highwoods CEO Ed Fritsch when he said that the MetLife deal represents “a great win for all North Carolinians.”

Justin Good and Allan Lynch, Cushman & Wakefield | Thalhimer, Raleigh, NC