New York lost $1 trillion due to the relocation of large companies to other states
Seeking a safe haven from rampant crime, tight taxes and the exorbitant cost of living, 158 well-fed financial companies with $993 billion in assets packed their bags and left New York, taking thousands of highly paid employees with them, according to the New York Post.
Icahn Capital Management, headed by billionaire Carl Icahn, is one of the most prominent companies to move to the Sunshine State. In August 2020, the company left its chic Manhattan home atop the General Motors building on Fifth Avenue and moved into a 14-story office complex in suburban Miami.
Now Icahn’s firm, which manages $22.2 billion in assets, operates less than a mile from his Indian Creek Village mansion.
Meanwhile, Elliott Management, owned by hedge fund mogul Paul Singer, which manages $59.2 billion, moved its headquarters out of Manhattan in October 2020 after changing investment targets including AT&T, Twitter and the Argentine government. in West Palm Beach, Florida.
A year later, tech stock guru Kathy Wood, known for her bold bet on Elon Musk’s Tesla car company, moved her $24.7 billion worth of assets, ARK Investment Management, to St. Petersburg, Florida.
Zombie buildings abandoned during the commercial real estate apocalypse
In total, according to the report, 56 New York firms moved to Florida, and most of the remaining ones moved to warmer states: Texas, South and North Carolina. New York isn’t the only big loser: California also lost $1 trillion. financial assets under management by moving to Florida, Texas and other cheaper states.
Other major cities that have lost out to Florida include Chicago, which last year lost to Miami’s hedge fund giant Citadel, billionaire Ken Griffin.
Mass migration threatens to deal a devastating economic blow: Last year, Wall Street accounted for 16% of all economic activity in the city and 7.3% of economic activity statewide. According to an October report by New York State Comptroller Thomas DiNapoli, the latter is just 1.7%, the highest in the country and above the national average.
In addition, population outflows have significant tax implications for the city and state. Financial firms paid $5.4 billion in New York taxes last year and accounted for nearly a quarter of all personal income tax collections, the report says.
Tax revenues from this industry will “fall significantly” this year, the report warns. The report also notes that in 2022, New York City’s share of financial industry jobs was 17.6%, down nearly half from a third in 1990, noting that “jobs are moving to regions with lower cost of living”.
Giant firms are leaving Wall Street en masse
An example is Goldman Sachs, which is investing heavily in Dallas, where the cost of living is about 40% lower than in New York. According to documents filed with the Dallas City Planning Commission and obtained by the Dallas Morning News, Goldman Sachs is in the process of erecting three campus buildings near downtown Dallas.
Construction of a complex with an area of 75 thousand square meters. meters worth about $500 million was made possible thanks to tax incentives in the amount of $18 million, which the city of Dallas provided a Wall Street bank in July last year in exchange for creating up to 5,000 jobs in the city.
When the campus opens in 2027, employees will be able to use underground parking, retail space on the ground floor, a 6,000 sq. m. city park. meters, a hotel and residential towers, the documents say. A spokesman for Goldman said the bank has no plans to abandon its downtown Manhattan headquarters at 200 West Street.
In May 2022, the largest fund manager, AllianceBernstein, moved its headquarters from New York to Nashville, taking with it $685 billion in assets under management. At the same time, the mega-firm also moved 1,000 jobs elsewhere, which, according to Bloomberg, will save it $80 million a year.
The move to Nashville was driven by real numbers that show the significant savings that can be made by leaving New York: According to Statista, companies in Manhattan spend an average of $94 per square foot of corporate space, while those in Nashville spend $31 per square foot. Overall, the cost of living in the music city is nearly 42% lower than New York City, according to cost-of-living comparison service Salary.com.
Wells Fargo, which manages $603 billion in assets, will also spend $9 million to build an 80,000-square-foot North Texas center. meters. With more than $30 million in tax credits, Wells Fargo will spend $500 million to build two buildings and a 4,000-space garage that will employ more than 3,000 employees by the end of 2026.
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