Monday, December 7, 2020

Et tu, Goldman Sachs

As though things were not bad enough in Bill de Blasio’s New York City, now Goldman Sachs is considering moving some of its divisions to Florida. If not to Florida, perhaps to Texas.

Political mismanagement, by the mayor and the state governor, has produced high taxes and soaring crime rates. When it becomes dangerous for your children to walk the street or to take the subway, you start thinking about leaving town. If you are running a major bank, you hear from your staff that they would be happier living somewhere else.

Of course, it’s a process. It unfolds over time. You cannot just flick switch and leave town. After all, many of New York’s finance executives have considerable investments in property, both in New York and in the Hamptons. In addition, the schools are better in New York City-- if your children are in private school, of course.

Anyway, Bloomberg has the story:

Goldman Sachs Group Inc. is weighing plans for a new Florida hub to house one of its key divisions, in another potential blow to New York’s stature as the de facto home of the U.S. financial industry.

Executives have been scouting office locations in South Florida, speaking with local officials and exploring tax advantages as they consider creating a base there for its asset management arm, according to people with knowledge of the matter. The bank’s success in operating remotely during the pandemic has persuaded members of the leadership team that they can move more roles out of the New York area to save money.

Goldman Sachs is merely doing what many other companies have been doing. The result, empty office buildings and starkly reduced apartment rents:

The deliberations at the Wall Street icon, often a trendsetter for the industry, adds to the cloud over New York’s future. As restaurants and stores fight to survive, the city is trying to stem the flight of white collar jobs to states with lax tax regimes and lower costs of living.

Manhattan now has the most office space available since the aftermath of the Sept. 11 attacks. This time, the trend began even before the pandemic struck, with AllianceBernstein Holding LP shaking up city boosters in 2018 with plans to move its headquarters to Nashville.

Bloomberg suggests that the company is merely trying to save money. And that it has been doing so for years now:

Inside Goldman, sentimental attachment to the city where it rose to prominence is taking a back seat to the company’s ambitious target unveiled early this year to cut $1.3 billion in costs, in part by shifting employees to cheaper locales. It’s unclear how many people could eventually go to Florida. In the last decade, Goldman has incrementally expanded offices in places like Dallas and Salt Lake City to thousands of jobs in an effort to trim expenses. The virus has cemented its resolve to accelerate that shift.

“We are executing on the strategy of locating more jobs in high-value locations throughout the U.S., but we have no specific plans to announce at this time,” a spokesman for Goldman Sachs said in an emailed statement.

Note the phrase: throughout the United States. What does this say about Wall Street being the world’s financial capital.

Florida’s warm weather and lack of a state income tax have lured wealthy Americans for years. But money managers and other financial firms have been migrating there more recently to accommodate owners and top talent. The pandemic could accelerate the trend, with many New Yorkers already decamping to the Sunshine State as they wait for a vaccine in spacious homes with private pools.

Paul Singer’s Elliott Management Corp. plans to move its headquarters to West Palm Beach from midtown Manhattan. Other investing powerhouses like Blackstone Group Inc. and Ken Griffin’s Citadel have been bulking up their presence in the state.

And then there was the coronavirus, and the Democratic Party. But, didn't these banking titans all contribute to Joe Biden’s presidential campaign. Huh?

The coronavirus has stoked more serious conversation inside boardrooms, especially as executives fret about the new Democratic administration raising taxes and look to cut expenses to improve returns in an ailing economy.

Since New York’s lame political class managed to chase Amazon out of Queens, their next act, under the leadership of AOC, might be to convince New York bankers to decamp for warmer and more hospitable climes.

The times they are a changin'.


trigger warning said...

While I do not lament an exodus of Goldman from Manhattan, I'm sorry to hear they're considering becoming Florida voters. If that possibility materializes, perhaps a version of Glenn Reynold's Welcome Wagon could gift them a Balrog puppy upon arrival.

Sam L. said...

The mayor and the governor say moving is dumb; this is the place for FINANCE. Goldman: Bye, BYE, you fools. You have shot yourselves in the foot, and gangrene is setting in.

RNB said...

"...states with lax tax regimes." I think that translates as "states that do not attempt to tax the paychecks of out-of-state pandemic relief workers setting up emergency hospitals in Central Park."