Is New York Recovering?

Fair is fair. By the laws of contrary sentiment, a principle engraved in the brain of every Wall Street trader, once everyone takes one side of a trade, you do well to take the other side. If everyone is bullish, that is a good sign that the market is going down. If everyone loves tech or Bitcoin, get out of tech and Bitcoin.

The reason has been explained thusly. When everyone is bullish they have invested most of their money in the stock market. But then, there is very little cash available to move stocks upward. When people start selling, there is a paucity of buyers, and the market heads south.

So, I have remarked that New York City is in bad shape. Many of us believe that it will not soon bounce back to its former glory. Many of its finance industry tycoons picked up and moved south, to South Florida, taking the tax base with them.

Yes, I understand that new legislation will bail out blue cities and states, but how long will that last.

Office buildings are mostly empty. Apartment rentals are so slow that many developers have taken units off the market. They would rather not offer low rents when they might be able to offer higher rents sooner than later. And, last Monday, at my gym in midtown Manhattan, during my mid morning workout there was exactly one person working out in a gym that is designed to accommodate 190 people. That one person was-- your humble blogger.

As though on cue, Bloomberg News offered a more optimistic take on New York’s future. Perhaps the story was planted by developers who want to gin up the real estate markets. Perhaps the story is more right than I think.

Being fair and balanced I will offer some of the information, via the Daily Mail. The Bloomberg story is behind a paywall.

Late last year, Florida was touted as the future hub of American finance as a slew of billion-dollar businesses opened up offices in the Sunshine State. 

The uber-wealthy were lured to Florida by better weather, lower taxes and fewer  restrictions imposed on residents amid the COVID-19 pandemic.  

But now, we learn that hedge fund tycoons are thinking of returning to the city:

But Bloomberg claims that a number of billionaires are now having second thoughts about life in Miami because the cultural and educational opportunities just don't compare to those in the Big Apple. 

'The main problem with moving to Florida is that you have to live in Florida,' Jason Mudrick, who oversees $3 billion at Mudrick Capital Management in NYC, told the publication. 

While Mudrick has not made the move down south, many of his wealthy friends have done so and they are already starting to trickle back north. 

'New York has the smartest, most driven people, the best culture, the best restaurants and the best theaters,' he stated.

But, when will the trickle become a stream. For now, we note that many of the tonier New York restaurants are opening branches in Palm Beach and Miami. Besides, if you really want to eat well, you would do better to move to Lyon, France.

As for New York's culture and the educational opportunities, please. I have often reported, most recently two days ago, on the complete and total degeneration of private school education in New York City. Parents are now paying tens of thousands of dollars to have their children indoctrinated in critical race theory. I do not know what it’s like in South Florida, though I have heard that the private schools are running out of places. Obviously, if there is enough of a demand, supply will appear.

As for New York’s vaunted culture, it certainly has more theatres and more concert halls. It has more art galleries and auction houses. But, if there is a demand in South Florida, as there is for art galleries in Palm Beach, they will open up shop there. How soon before tourists return to New York? Without them, the restaurant, concern and theatre scene will wither on the vine.

New York City still retains a mystique:

An anonymous hedge fund founder who moved to Miami six months ago also spoke to Bloomberg and echoed similar sentiments. 

The wealthy Wall Street investor says he will likely return to the Big Apple in the near future because Florida does not have the 'dynamism' that New York does. 

He also claimed that the affluent private schools in Miami simply don't compare to those in Manhattan. 

Dynamism-- say what? If you think that crime in the subways and filth on the streets represents dynamism, just wait until your child gets mugged on the way to school.

New York looks a lot better when you are not living there.

Anyway, many of those who left Manhattan last year did not move to Florida. This is an interesting statistic, but the real question is: how many of those who moved pay how much city and state taxes?

According to data obtained by Bloomberg, Miami was not even the number one spot for fleeing New Yorkers to relocate to amid the pandemic. 

Jersey City, Los Angeles, Philadelphia and Chicago were more popular relocation destinations.  

The US Postal Service recorded that just over 3,000 Manhattanites moved to South Florida last year - accounting for just nine percent of all people who left the NYC borough.

If you have found the Bloomberg case for New York’s resurgence persuasive, the Daily Mail closes with these sobering facts:

But despite that fact, there are still a slew of big business setting up shop in the Sunshine State.

 

Carl Icahn, the founder of Icahn Enterprises, relocated his firm from Manhattan to Sunny Isles Beach, in Miami-Dade County, in 2020. 

Last October, Blackstone - an NYC-based private equity alternative investment management firm with assets of $34 billion - announced it was going to open an office in Miami.

Jamie Dimon - the CEO of JP Morgan Chase - also claimed he was open to moving the $2.6 trillion company's headquarters down south to Miami. 

Remember that Dimon is now trying to sublet some 800,000 sq. ft. of Manhattan office space. The bank has already built a hub in Plano, Texas. It’s sobering, to say the least.