The pandemic ends in one strong sign, Wall Street banks and hedge funds that fled to Florida are now returning to New York
(Photo by: Stephen Rafferty / Eye Ubiquitous / Universal Images Group via Getty Images)
Universal Images Group via Getty Images
New York City has been the epicenter of the Covid-19 outbreak for a while. The “city that never sleeps” was almost completely closed. Restaurants, cinemas, Broadway plays, and sporting events at Madison Square Garden have all closed.
New York Mayor Bill de Blasio badly managed the Big Apple. He moodily called for the school to be closed, causing chaos and fear among parents. De Blasio aroused the ire of small business owners for frequently changing the rules of how they worked.
Over time, the city, widely regarded as one of the world’s greatest places for finance, business, culture, and nightlife, seemed to be over. Rich people fled to the suburbs of New Jersey and Connecticut. The ultra-rich moved to the Hamptons, upscale beach towns on the other end of Long Island – popular with the rich and famous of New York City. The city felt deserted and there were reports of crime, violence and drug use on the open streets.
Fearing that this would mark the end of New York’s reign as capital for the financial industry, investment banks and hedge funds planned to leave the company. It was an inside joke that Florida was New York’s sixth borough as many elderly people moved there to retire.
It was natural that Florida would be one of the most attractive destinations to move to. An added benefit is that the Sunshine State has no state taxes and the weather is much nicer compared to the freezing, snowy winters in New York. For most of the pandemic, Florida remained open and did not require the wearing of masks. This provided a welcome relief for the highly regulated New York City and being stuck in an apartment all day.
Charles Gasparino, longtime Wall Street chronicler, wrote in the New York Post: “Many other banks and financial firms are now trying to move out of the once friendly New York City borders that are no longer so friendly. “He added,” The trend has been slow burning for the past two decades, but now it has thanks [Covid-19], rising costs, and an immaculate political class to rule this city and state. “Gasparino said of JPMorgan’s CEO:”[Jamie] Dimon, I am told, vetoed a plan to move part of the bank to South Florida a few years ago because he thought the schools were not good enough. Now he seems to have changed his mind and is considering moving outside of New York City numerous times. “
Reuters reported back in December, “There are around 30 major financial firms in South Florida fighting the tires,” said Kelly Smallridge, who runs an economic development agency in Palm Beach County. A handful of them are serious about changing staff, she said. Companies like Elliott Management, Citadel, and Moelis, among others, say they will open satellite offices there or allow their moneymakers to be based in Florida.
Virtu Financial, a hugely successful electronic commerce company that made approximately $ 9.6 million a day in the third quarter of 2020, opened a store in Palm Beach Gardens, Florida. Doug Cifu, CEO of Virtu, argued, “We interviewed our employees, and people’s greatest concern was the quality of life.” There is also another benefit for the well-paid workers. You will see “a sideways movement in wages equivalent to about an 11% increase because Florida has no income tax.” Cifu said of moving to Florida after lugging back and forth from his New Jersey home to Manhattan, “This is a forever thing. We [are not] Come back.”
A combination of high taxes, poor governance, rising crime, capricious business and school closings, and a revival in Covid-19 cases could have helped Goldman Sachs consider moving a large money management division to Florida.
The lack of a state income tax, plus warm weather and a business-friendly mindset, have already led hedge fund billionaires and 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 for office space in downtown Miami in October. Deutsche Bank previously set up a sizeable bridgehead office complex in Jacksonville, Florida.
Now things are starting to change. You probably feel it in the air. Covid-19 cases are declining, there are fewer horror stories from people going to the hospital, states – like New York, California, Connecticut, and Texas – are opening up, and some are lifting mandates wearing masks. The stock market is on fire, real estate is hot and it looks like companies are starting to rent again.
As things look better, the Manhattan exodus has subsided – and it is now reversing. Wall Street big shots who moved to Miami and Palm Beach during the restrictive lockdowns want to return home as they miss their old, pre-pandemic Manhattan lifestyle. Wall Street executives claim the city has “the best schools, theaters and restaurants.” Several billionaires are seriously considering returning to the Big Apple, according to Bloomberg.
Jason Mudrick, who oversees $ 3 billion at Mudrick Capital Management in NYC, said, “The main problem with moving to Florida is having to live in Florida.” Mudrick said, “New York has the smartest, most motivated people, the best culture, the best restaurants and the best theaters.” He added, “Anyone who moves to Florida to save a little money loses all of that.”
Mudrick predicted that when people return to New York, “It will be like the 1920s – you will see a resurgence here like never before.” This shift towards a return to New York is a strong signal that the economy and businesses are about to open again. In this case, as Goldman Sachs said, the labor market will see an imminent job boom.