Major cities such as New York, San Francisco, and Los Angeles punished investment firms with high tax rates and a lack of business-friendly policies that only sparked an exodus during Covid. Progressive city leaders in these metro areas also implemented failed social justice reforms that unleashed a crime wave and exacerbated the exodus. Many of these firms fled to Florida, Texas, and other Sun Belt states.
From 1Q20 through the end of 1Q23, Bloomberg data shows more than 370 investment firms — or about 2.5% of the US total — with $2.7 trillion assets under management — moved their offices to a new state.
“The vast majority of the migration was out of high-cost-of-living locales in the Northeast and on the West Coast and into Florida, Texas, and other Sun Belt refuges,” Bloomberg said.
The exodus of investment firms from crime-ridden and high-taxed Northeast and West Coast cities show Florida, Tennessee, and Texas were some of the top destinations. While the South booms, the exodus has left northern cities with weakening commercial property markets and a decline in tax revenues that could soon strain local budgets.
Even though New York City is the world’s financial capital, Wall Street of the South, that is, Miami — is booming. Most of the investment firms fleeing NYC and California moved to South Florida and Dallas.
“The Sun Belt is continuing to change — no longer just a place of traditional industries like oil and gas, no longer just focused on tourism, or just focusing on the retirement community,” said Amy Liu, the interim president of the Brookings Institution and a researcher on urban policy.
Liu continued, “These pandemic moves sort of reinforce that the major metros in these states are certainly becoming a destination for new industries.”
Florida has become a prime location for many financial firms. Ken Griffin’s Citadel moved to Miami, while hedge fund Elliott Management Corp. relocated its headquarters to West Palm Beach. Similarly, Point72 Asset Management, Schonfeld Strategic Advisors, and Millennium Management have all shifted operations to Florida.
Texas gained the most investment jobs during the great migration.
It’s only a matter of time before Florida rivals NYC as a finance hub.