Wall Street banks, hedge funds and other financial institutions looking to expand are increasingly turning to the business-friendly Sunbelt.
These financial firms, like others that have moved into the region, are drawn by a variety of factors, including lower costs of living and doing business, opportunities for expansion, and less government red tape.The Sunbelt is made up of 15 states in the southern United States
Three of the seven are concentrated in this region. States with no income tax, including Texas and Florida, are particularly attractive areas for businesses.is more than 25,000 businesses relocated More than 281,000 people moved to Texas from other states between 2010 and 2019, according to data from the Dallas Fed.
The southward trend was particularly accelerated by the COVID-19 pandemic. remote work Living and working in traditional northern metropolitan cities like New York and Chicago became a choice rather than a necessity. From 2022 to 2023, a total of 593 companies have relocated their headquarters. That's a 29% year-over-year increase, according to data from the relocation company. hire a helperWhile not all companies have moved from the North to the South, Texas and Florida have welcomed the largest influx of headquarters.
Several financial services giants have expanded their presence in Sunbelt cities in recent years with fancy new multimillion-dollar campuses or relocated altogether in search of sunnier skies and more balance-sheet-friendly tax regimes. Below are some of the biggest movement and growth stories in this space.
The south also belongs to this country Fastest growing region It had all of the top 10 fastest-growing U.S. metropolitan areas from 2022 to 2023, according to Census Bureau data. Among the increasingly popular regions, two of her states stand out in attracting newcomers: Texas and Florida. Last year, both states recorded the highest number of migrants for the third year in a row. According to U-Haul's Growth Index Report.
read more: Housing supply is booming in Florida and Texas, but people aren't buying them
A larger population means businesses can employ more workers, giving them more room to grow both in terms of headcount and infrastructure in less crowded cities in the south. I'm saying that.
“We see a lot of externalities and spillovers between these companies,” said Pia Olenius, a labor economist at the Federal Reserve Bank of Dallas. “Initially they are very small and don't have a lot of momentum, but once these clusters grow, the labor pool for that particular industry increases, which in turn encourages more industries to come to the area. ”
Catch more flies with honey
States like New York and California, long traditional business hubs, have been hemorrhaging businesses since the pandemic. From the end of 2019 to August 2023, 158 companies will manage approximately $1 trillion in assets Head office moved A Bloomberg analysis found that it was coming from New York.
“It's a problem for places like New York City and San Francisco, where taxes are high,” said Tomasz Pikorski, a professor at Columbia Business School. “It's a difficult balance to strike. When you lose businesses, your tax revenue starts to fall, and when you lose tax revenue, you might want to raise taxes, but then you could lose even more businesses.”
new york Corporate tax rates range from 6.50% to 7.25%; California With a corporate tax rate of 8.84%, its tax environment is one of the highest in the world. worst rank In this country, it is done by the Tax Foundation, a tax policy nonprofit organization.
“The mayor or governor will call you. [in Texas] They say, “Jamie, how can we add more employees?'' JPMorgan CEO Jamie Dimon told reporters After touring a workforce training facility in Houston in February. “And you can see it when you look at other states that are almost completely opposite.”
It was Dimon's not-so-subtle way of telling leaders in states like New York, where JPMorgan is based, to be a little kinder to the companies they call home.daimon had told Bloomberg News The investment bank announced nearly a year ago that it was growing in Florida and Texas, saying, “Like a business, we want you to come.”
“We love Florida and we're growing here,” Dimon said. I was fascinated by the idea There were plans to move the bank's headquarters to Miami in 2013, and again in 2020, but the plan did not move forward.
“We currently have more employees in Texas than New York,” Dimon added. “It wasn't meant to be, but Texas loves you there.”
JPMorgan's Texas workforce has grown to more than 30,000. In New York, the bank's workforce has fallen to fewer than 29,000, down from 35,000 in recent years. The company further expanded its already expansive regional footprint in Plano in 2018, opening yet another location. $300 million expansion. His 6,500 employees are located at the Texas campus.
And it's not the only major Wall Street firm to see potential in the Lone Star State. Goldman Sachs is $500 million state-of-the-art building in DallasAnd Wells Fargo broke ground on the 850,000-square-foot site this time last year. $455 million office campus At Irving.
Is it too early to say goodbye?
JP Morgan too branch closed Last month, 45 Wall Street finally severed the financial giant's more than 150-year relationship with the street that gave its name to the world's banking industry.
But we haven't given up on the Big Apple just yet, and construction is underway. Huge new global headquarters It's still a work in progress in the heart of midtown Manhattan. JPMorgan said the new office “reinforces its commitment to New York City.” The company says the nation's largest bank by assets contributes $29.8 billion annually to the city's economy and supports an additional 40,000 jobs across local industries.
Piskorski, a professor at Columbia University, said the competition between different parts of the country to become business hubs could shake long-uncontested cities like New York and San Francisco out of complacency. said.
“We like competition because competition increases efficiency,” Piskorski says. “It's good that cities don't have to compete with each other to become attractive places.”
Waves of corporate relocation tend to wax and wane, said Mr. Orrenius of the Dallas Fed, noting that there is a correlation between corporate relocations and business cycles: Companies tend to take advantage of downturns to relocate and then stay put when the economy stabilizes.
And we're already starting to see some of those balancing effects, Orrenius said. The influx of people into Texas in recent years has driven home prices in Dallas and Austin above the national average. He said this “crowding effect” — the typical market response to a surge in demand — reduces some of the incentives to attract businesses. And places like New York and San Francisco are unlikely to let things slide, he said.
“There will always be a need for a policy response,” she said. “Whereas businesses are moving and areas are losing their industrial base, they will react and try to put in place policies to retain businesses.”
