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For a time, New York City was the epicenter of the Covid-19 outbreak. The “city that never sleeps” was nearly completely shut down. Restaurants, movie theaters, Broadway plays and sporting events at Madison Square Garden were ordered to close down.
New York City Mayor Bill de Blasio mismanaged the Big Apple. He capriciously called for school closures on a moment’s notice, causing chaos and angst amongst parents. De Blasio incurred the ire of small business owners, as he frequently changed the rules of how they could operate.
As time wore on, the city that’s widely perceived as one of the world’s greatest places for finance, business, culture and nightlife, seemed over. Rich people fled to the suburbs of New Jersey and Connecticut. The ultra-wealthy moved to the Hamptons, upscale beach towns located on the far end of Long Island—favored by New York City’s rich and famous. The city felt deserted and there were reports of crime, violence and drug usage out in the open streets.
Fearing that this may be the end of New York’s reign as the capital for the financial industry, investment banks and hedge funds made plans to leave. It was an inside joke that Florida was the sixth borough of New York, as many older people moved down there to retire.
It was natural that one the most attractive destinations to relocate to was Florida. An added benefit is that the Sunshine State doesn’t have state taxes and the weather is much nicer compared to the freezing cold and snowy winters in New York. For most of the pandemic, Florida remained open and didn’t mandate mask-wearing. This offered a welcome relief from the highly regulated New York and being stuck in an apartment all day.
Charles Gasparino, the long-time chronicler of Wall Street, wrote in the New York Post, “Many other banks and financial businesses are now seeking to move out of the once-friendly confines of New York City, which isn’t so friendly anymore.” He added, “The trend has been a slow burn over the past two decades, but now it has kicked into high gear thanks to [Covid-19], spiraling costs and a feckless political class that runs this city and state.” Gasparino said about JPMorgan’s CEO, “[Jamie] Dimon, I am told, vetoed a plan several years back to move a swath of the bank to south Florida because he didn’t think the schools were good enough. Now, he appears to have changed his mind and is considering plenty of relocations outside New York City.”
Reuters reported back in December, “About 30 major financial firms are ‘kicking the tires’ in South Florida, said Kelly Smallridge, who runs an economic development agency in Palm Beach County. A handful of them are serious about shifting staff there, she said. Companies, including Elliott Management, Citadel and Moelis are among the latest to say they will open satellite offices there or allow their moneymakers to be based in Florida, executives have said.”
Virtu Financial, a highly successful electronic trading firm that made about “$9.6 million a day” during the third quarter of 2020, set up shop in Palm Beach Gardens, Florida. Virtu’s CEO Doug Cifu offered his reasoning, “We surveyed our employees, and the No. 1 concern that people had was quality of life.” Moreover, there’s another benefit for the well-paid workers too. They will “see a lateral pay move, which amounts to around an 11% increase in salary because Florida has zero income tax.” Cifu said about the move to Florida, after schlepping back and forth from his home in New Jersey to Manhattan, “This is a forever thing. We [are not] coming back.”
A combination of high taxes, poor governance, ever-increasing crime, capricious business and school shutdowns and a resurgence in Covid-19 cases may have contributed to Goldman Sachs considering to move a large money management division to Florida.
The absence of a state income tax, plus warm weather and a business-friendly mindset, has already prompted hedge fund billionaires and native New Yorkers Paul Singer and Carl Icahn to relocate their respective businesses to Florida. Blackstone Group, the large private equity firm, signed a long-term lease in October for office space in downtown Miami. Deutsche Bank previously established a sizable beachhead office complex in Jacksonville, Florida.
Now, things are starting to change. You probably feel it in the air. The Covid-19 cases are coming down, there are less horror stories of people going to the hospital, states—like New York, California, Connecticut and Texas—are opening up and some are doing away with the mask-wearing mandates. The stock market is on fire, real estate is hot and it looks like companies are starting to hire again.
As things are looking brighter, the exodus out of Manhattan has subsided—and it’s now reversing. Wall Street big shots who moved to Miami and Palm Beach during the restrictive lockdowns are seeking to come back home, as they miss their old, pre-pandemic Manhattan lifestyle. The Wall Street executives claim that the city boasts the “best schools, theaters and restaurants.” Bloomberg says several billionaires are seriously considering moving back to the Big Apple.
Jason Mudrick, who oversees $3 billion at Mudrick Capital Management in NYC, quipped, “The main problem with moving to Florida is that you have to live in Florida.” Mudrick explained, “New York has the smartest, most driven people, the best culture, the best restaurants and the best theaters.” He added, “Anyone moving to Florida to save a little money loses out on all of that.”
Mudrick predicted that when people return to New York, “It will be like the Roaring Twenties — you’ll see a resurgence here like never before.” This shift toward returning to New York is a strong signal that the economy and businesses will soon reopen. When this happens, the job market will experience, as Goldman Sachs said, an upcoming jobs boom.
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