Are Texas and Florida the brand new California and New York?
- Texas and Florida challenge California and New York, but will they replace them?
- Tech elites from Silicon Valley flock to Texas, mirroring the East Coast Big Apple financiers who fled to Florida.
- They all seek warm weather, affordability, and low taxes as they leave behind a higher cost of living.
- Texas and Florida may never really supplant California and New York, but the rivalry is real and positions the southern states as real power players.
- You can find more stories on the Business Insider homepage.
Sunnier areas, lower taxes, and cheaper cost of living. California’s tech elite and New York financiers are pursuing all three, and they found this trifecta in Texas and Florida.
To the west, there’s a Silicon Valley exodus to Texas led by Elon Musk and Oracle’s move to the Lone Star State. On the east coast there is the Wall Street exodus to Florida, marked by the move of Charles Schwab himself and reports of Goldman Sachs relocating some of its activities to the Sunshine State.
The rise of remote working in the pandemic has prompted companies and the people who work for them to reassess their locations and the lifestyle that goes with them.
Migration is turning the no state income tax areas in Texas and Florida into the equivalents of California and New York in 2020, but actually only for now.
Silicon Valley to Texas
Increasingly high costs, security and the political climate in San Francisco are pushing some tech elites out of San Francisco, Meghan Morris and Berber Jin of Business Insider reported.
And it’s not just the bigwigs who are rethinking their lifestyle. More than a third of technicians in the Bay Area said in a recent survey that they would consider leaving the company if they could work remotely permanently.
While the refugee residents of Silicon Valley are scattered all over Miami to Denver, most have made it to Texas. Austin, long the center of the Texan tech scene, was a particularly hot spot. Drew Houston, CEO of Dropbox, and JD Ross, co-founder of Opendoor, are moving to town as companies including software giant Oracle and venture capitalist and Palantir co-founder Joe Lonsdale’s investment firm move too.
Oracle co-founder Larry Ellison moves Oracle headquarters to Austin.
Reuters / Robert Galbraith
Tesla also has a cybertruck factory under construction in the area. SpaceX founder and CEO Elon Musk is the latest high-profile tech figure to announce a move to Texas. However, it is unclear where he is moving in the state.
Even Houston has attracted technical talent, and Hewlett Packard Enterprises has moved its headquarters there from San Jose.
“There are a lot of people who have already moved and haven’t been written about. They’re pretty well known,” venture capitalist Keith Rabois, who went to Miami instead of Texas, told Morris and Jin. He declined to say who else was going. “After COVID, I think the concentration of talent has withered, maybe permanently.”
He said San Francisco’s place at the top of the tech hierarchy before the pandemic outweighed its dislike of the city, but remote working has messed that hierarchy.
Wall Street flows into Florida
While the Californian tech elite is packing their bags for the Lone Star State, New York financiers are swapping skyscrapers in Florida for sunshine.
The Elliott Management hedge fund moves its headquarters to West Palm Beach. Cochief Investment Officer Jon Pollock is believed to have lived at his West Palm Beach home during the pandemic. Charles Schwab, founder of the broker and asset management giant of the same name, also moved to Palm Beach this year, as the voting records show.
Blackstone, the world’s largest private equity firm headquartered on Park Avenue in Manhattan, is opening an office in Miami that will create up to 215 technology-oriented jobs. More recently, Goldman Sachs has been considering plans to relocate its asset management business out of New York, Bloomberg first reported.
Big Apple financiers are on their way to places in South Florida like West Palm Beach.
Business Insider recently spoke to 13 finance and real estate professionals about Florida’s growing pull in the midst of the pandemic, many of whom described spikes in larger and longer office space rents by NGOs and low real estate inventories as Big Apple financiers flood the area.
Stephen Rutchik, executive director of Colliers South Florida office services, told Business Insider during the talks that low taxes, warmer weather and a low-key atmosphere had attracted financial services companies in recent years.
However, interest really increased in July, when the industry was more comfortable with remote working. Rutchik said his team sees unprecedented interest as the volume of calls from prospective tenants increases “overnight” to “rapid”.
“We tour hedge funds on our agency site one to three times a day,” he added.
Texas and Florida are officially in the game
With Texas and Florida in the spotlight as new hot spots, experts will say they won’t dominate New York’s Wall Street and California’s Silicon Valley.
Jonathan Woloshin, director of real estate and finance research at UBS, acknowledged that Texas and Florida have been and will continue to benefit from continued population, employment and business growth, and that the influx of jobs includes a greater percentage of the front-line will “work as opposed to back-office-related functions. But they’re not necessarily the” new “California and New York, he added.
Ron Conway, the founder of SV Angels, dubbed the “Godfather of Silicon Valley,” recently told Business Insider that this is not the end of Northern California’s dominance.
“While the challenges in the Bay Area can be frustrating, there’s still no place in the world like Silicon Valley and the San Francisco Bay Area when it comes to talent, access to capital and the tech ecosystem for startup. ups going that created this have created many successful companies and founders, “he said.
Wall Street will not lose its footing in the long run, experts say.
Andriy Blokhin / Shutterstock
With regard to Florida, several experts Business Insider spoke to earlier highlighted some challenges that could ensure the real Wall Street holds on to its core position: a tighter job market, expensive moving costs, and a lack of luxury homes available.
On the other side of the Atlantic, similar fears that London could lose its luster after the Brexit vote have so far proven unfounded. Although UK fund managers predict 16% of UK wealth management jobs will be relocated, a Financial Times survey found that the majority of international banks and wealth managers have increased their London workforce since 2015.
California and New York may remain unprecedented in the long run, but the high status of Texas and Florida as current major attractions could give the former two a run for their money.
Woloshin said that as individual wealth increases in Florida and Texas, more venture-like and private equity fundraising and investment could likely occur in both states.
“New York and California should remain strong business destinations because of their attractiveness to the talent pool,” he said. “However, going forward, they won’t be the only game in town that creates quality jobs and wealth creation.”