Wall Street firms have been exiting liberal states in favor of those in the Sun Belt, opting for regions that have significantly lower crime, lower taxes and lower cost of living.
According to a recent Bloomberg report, firms that collectively manage $2 trillion in total assets have departed from the states of California and New York in recent years for states in the Sun Belt, including Florida and Texas.
In the three years leading up to March of 2023, there were 370 major investment firms that have a total of $2.7 trillion in assets under management that have relocated their headquarters from these two states. That number represents 2.5% of all the assets that are managed by various investment firms in America.
States such as Tennessee and North Carolina saw companies that have more than $600 billion in assets under management relocate to their states. This was fueled in large part to AllianceBernstein moving to Nashville, Tennessee, from New York, and Allspring Global Investment moving to Charlotte, North Carolina, from San Francisco.
Other major moves include Charles Schwab moving its headquarters from San Francisco to Dallas, Ken Griffin’s Citadel moving from Chicago to Miami, DoubleLine relocating to Tampa from Los Angeles, and both ARK Investment and Icahn Capital Management moving to Florida from New York.
Bloomberg reported that all of these moves are having a significant effect on the tax revenue base for both New York and California, in addition to the career prospects that professionals in the financial industry have.
According to the report, 33% of all U.S. jobs in the financial industry were located in New York in 1990, but that share dropped all the way to 17.6% in 2022.
In addition to the tax revenue and industry jobs being hurt, the moves by these financial firms is significantly affecting commercial real estate in major markets such as Boston, Chicago, Los Angeles and New York. That compounds a problem that already existed, thanks to the emergence of work-from-home options.
The Brookings Institution’s interim president Amy Liu, who is also a researcher on urban policy, recently commented:
“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 the retirement community. These pandemic moves reinforce that the major metros in these states are certainly becoming a destination for new industries.”
Some of the leaders of these financial firms also much prefer to live in states that lean Republican. States such as Florida and Texas, for instance, have moved to reinstate legal migration, recalibrate initiatives around green energy and diversity, and restrict abortions in later terms of pregnancy.
Some also prefer not being looked at as crazy or out of line just for sharing an honest opinion. This is what David Blumberg, a member of the global network of high-net-worth individuals called Tiger 21 referred to recently when he commented on his recent move from California to Florida:
“People don’t drop cocktail glasses at a party just because you said something.”