The list of corporations that are relocating their headquarters from New York to states like Texas and Florida continues to grow daily. While it is true that New York has been in decline in many ways, is experiencing record crime and projecting a less than stellar quality of life, the movement is more out of an allure than what the other states have to offer, especially Florida.
It was once unheard of for a corporation not to have its headquarters in New York. The mere fact that New York is the financial capital of America was an automatic for corporations. But over time a physical address became less important especially with the developments in technology. In recent years, especially with the onset of Covid, corporations began to rethink their loyalty to New York. While they once believed that New York was their best option for doing business, they are rethinking that premise especially since Florida seemed to offer business everything it needed and then some.
The move Southward, of course, did not begin with corporate America but with the population in general. According to the U.S. Census, Florida’s population growth through the last decade was an astounding 14.6%, the highest of all states. Florida has also recently seen an influx of remote workers due to its low cost of living, with northeast Florida, in particular, seeming to be a popular area for remote work. As an increasing number of jobs turned to remote, people were looking for the better climate, improve quality of life and lower cost of living.
It is no wonder that Florida is so attractive to workers, as in addition to enjoying a low cost of living, they earn more, which meant having more money in their pockets and bank accounts. Salaries in the state increased by 9.7% from December 2020 to December 2021, the second biggest increase in the U.S. and certainly worthy of notice for a one-year jump. As more businesses open offices in Florida, the job market in the state is booming, too. The unemployment rate lowered from 8.9% to 3% between April 2021 and April 2022. What this means for corporations is that that there is stability in the labor force.
The Sunshine state has always been an attractive option for residing and retirement. More recently, Florida is becoming a destination for a different kind of migration, the great “corporate migration.” or “Wall Street South,” as Palm Beach Florida has recently been coined. They finally came to realize that they can still be a financial leader and not be headquartered in New York.
The perks of mitigating expensive taxes and lofty business regulations are what has been the allure for large brands such as Goldman Sachs, Spotify, and Blackstone to settle, which automatically created a boon in job opportunities. Billionaire tech entrepreneurs like Elon Musk and Peter Thiel have also bought homes in the Miami area. This added to the new reality of Florida being a business center, especially since the big business stories were now emanating from there.
According to a report released in March 2021 by location analytics company Unacast, Palm Beach County, Florida, is the No. 1 county for both people and income growth by a wide margin compared to counties studied in Florida. In 2020 the county welcomed 11,000 people with a new net income flow of $3.4 billion, far exceeding the gains of any other county in the U.S. studied by Unacast. For those who believe that it was Covid related, there is broad sentiment that this trend has even picked up in 2021 and continues in 2022.
Where did most of the people move from? An incredible 41% were from the New York City area. And these were largely middle-class people with an average per capita income of $80,282. Seventy thousand high-net-worth individuals left New York City with $34 billion in lost income. Billions of dollars are changing addresses, and New York City is a prime point of departure. The city leaders will no doubt feel the impact of this development and they will have to come up with a plan to stop the bleeding before reverting to a policy of attracting corporations to come back to the city.
With the data about the benefits of relocating to Florida, it is easy to understand why corporate America is choosing to leave New York for Florida. Over 300 financial services companies have moved to Florida. The companies are enamored with Florida’s pro-business climate. The government encourages corporate relocations to the state by maintaining regulations that stimulate business growth. The corporate tax is only 5.5% and there is no personal income tax, and no estate/ inheritance/ gift tax. There is, of course, no comparison to New York City with its high tax rate.
Florida’s low cost of living also supports the business-friendly climate. Consumers have more of an ability to stimulate local economies when typical goods and services are more affordable in areas with lower living costs. Simply put, the dollar carries more spending power. Office space is far more reasonable than back East. 50,000 square feet first rate office space in New York City costs approximately $20 million over five years. In Jacksonville, Florida one can still get 50,000 square feet of built out office space and save millions in rent.
Corporations moving to Florida feel that they have a great deal of clout there. The political environment is very pro-business. The business community is very organized. That is why more companies are feeling comfortable moving to Florida. In the post Covid era, it is important to have a good job market. The state hosts many top universities which means corporations have access to a skilled workforce. In addition, since the cost of living remains low, payroll costs remain reasonable.
For all the companies that have relocated to Florida, there are a myriad of corporations that are exploring the idea. Some are hedging their bets of a significant improvement in New York. JetBlue Airways has been back and forth with the idea with many predicting that it will only be a matter of time. Some corporations fear losing some of their loyal employees should they chose to relocate, and others are concerned about the considerable investment that they have made. But even those companies are thinking about the allures of Florida with a possible slogan of “Next Year in Florida!”