I-Team: IBM scaling back Key Center lease from Buffalo Billion

IBM reduced its footprint by 58%
IBM Buffalo
Posted at 3:00 PM, Apr 27, 2022
and last updated 2022-04-28 11:43:26-04

BUFFALO, N.Y. (WKBW) — Just seven years after New York State promised hundreds of high-paying jobs at a new I.T. hub as part of the Buffalo Billion, IBM is scaling back its downtown footprint.

The Buffalo Information Technologies Innovation and Commercialization Hub at Key Center cost taxpayers $55 million to develop. With IBM as its anchor tenant, it was billed as a driver for good paying jobs and private investment for years to come.

In 2015, Gov. Andrew Cuomo said the project was, "the start of bringing more cutting-edge technology and jobs to the area."

But public records obtained by the I-Team show the tech-giant is decreasing its physical space at the Key Center by 58 percent, vacating four of its seven floors.

IBM previously attempted to sublease extra space it wasn't using.

At a virtual board meeting last week, A state-backed entity called NY CREATES approved a lease amendment with IBM. It includes decreasing the space leased from 103,099 square feet, to just 43,027 square feet.

NY CREATES IBM Board Packet by Sean Mickey on Scribd

The state will also credit IBM $325,766 for previous “overpayment” and for “reconciliation” of additional rent already paid in 2020.

IBM will pay $1,875,000 per year, with the option to end the lease entirely in September 2023.

Of the 500 high-tech and high-paying jobs the state said were coming, a high of just 200 jobs were reported in February 2019 – many in a call center.

"While it is disappointing that the project, which began under the previous administration, did not meet all its goals, IBM has always paid market-rate rent that totals millions of dollars and has consistently had approximately 200 employees on-site in Buffalo," said Jason Conwall, spokesman for NY CREATES.

The spokesman added that IBM's rent covers "base costs" with the four floors they are vacating.

NY CREATES is in discussion with Empire State Development, SUNY, and the University at Buffalo to develop a plan to make the space available to new and growing businesses through Start-Up NY.

Last summer, a company providing services to IBM at the Key Center reported laying off 84 call center employees in a WARN Notice.

However, those weren’t the only jobs lost at the center. An IBM spokesperson told 7 News many employees at the Key Center left in November to create a spin-off called Kyndryl.

“A significant portion of employees left the IBIC at that time to work for Kyndryl in Western New York,” an IBM spokesperson wrote.

IBM says it’s actively hiring employees for their operations at the Key Center site and is transitioning to a new model under “IBM Consulting,” the professional services and consulting arm for the company.

“IBM values our presence in Buffalo and Western New York and remains committed to the region,” the spokesperson added.