State Farm plans to sell its DuPont office building, then lease the office space back from the new owners.
The company, in a memo to employees Tuesday, said it plans to sell "many" of its operations centers. Though it didn't mention DuPont specifically, company spokesman Brad Hilliard confirmed it would be among those put on the market soon.
"Any sale will have no impact on our operations there," Hilliard said.
State Farm plans to continue operations in all of these buildings as they are today, said the memo, dated Aug. 20 and obtained by The News Tribune.
The company plans to sell some of its operations centers then lease them back with terms between five and 15 years with options to renew beyond that. The memo notes that the company owns more than 100 buildings and that it's "assessing our options for those properties."
"The sale and lease-back of these facilities is not an indication that we are exiting a location or closing our operations in a particular location," the memo said.
The company already had started selling and leasing back its offices, most recently its Tempe operations center, as part of a five-year review of its business operations.
Moving from owned space to leased space is part of the company's larger reorganization, according to the memo. That reorganization started last year and has resulted in major growth in the hubs of Phoenix, Dallas and Atlanta.
Earlier this year Tacoma joined the ranks of cities benefitting from this reorganization. The company announced it would lease offices in downtown Tacoma for 1,100 new employees. It already employs about a thousand people in DuPont, where it built the facility in the 1990s, and company officials have long insisted operations there will remain.
Here's the full text of the memo:
August 20, 2013
TO: State Farm Employees
FROM: Mary Crego, Senior Vice President
SUBJECT: I: Real Estate Update
Earlier this year, we shared our real estate strategy to provide State Farm more flexibility as our operations evolve to meet changing customer needs.
We have already begun to implement our strategy by securing both short-term and long-term leases to house our growing operations in the hub cities of Atlanta, Dallas and Phoenix as well as a fourth Initial Loss Reporting and Auto Express location in Tacoma. We have also sold and leased back the Tempe Operations Center.
Today we are sharing:
- We have finalized the sale and leaseback of the Austin Operations Center for a term of 15 years with two five-year options to renew.
- A sale/leaseback of the Atlanta and Duluth Operations Centers will soon be finalized for a term of 10 years with two five-year options to renew. We are also exploring options for the Dallas Operations Center as we move more employees to the hub.
- Our intention is to put many of our major operations centers on the market. We will then lease them back for terms between five and 15 years with options to renew.
All of these operations centers will be maintained by State Farm employees as they are today. More details can be found on the Growing Our Future site.
The sale and lease-back of these facilities is not an indication that we are exiting a location or closing our operations in a particular location.
In February, we announced plans to streamline our physical presence by evaluating our business operations over the course of the next five years. Our evaluation is continuing, and our real estate decisions are not an indication of where particular business functions will eventually reside.
This real estate strategy is designed to provide appropriate operational flexibility as we make adaptations to respond to customers’ changing needs and expectations. Operational flexibility includes all the things we may need to adjust quickly – processes, systems, staffing, and training. Leasing rather than owning provides that flexibility.
State Farm owns more than 100 buildings, and we are still assessing our options for those properties. We may sell and lease back additional locations, as thousands of State Farm employees work in leased locations today.
Thank you for your ongoing dedication to our customers as we work through positive changes that will position us to serve their ever-changing needs and to grow State Farm.