The Emerging Financial Centers and the Brain Drain from Other Cities are Changing Where Deals Get Done
They used to call it “god’s waiting room,” now they call it home.
If you haven’t guessed, I’m talking about Florida, and more specifically, the big-name financial firms that have either moved their headquarters to “Wall Street South” or have built a much larger presence in West Palm Beach, Miami, Fort Lauderdale, or the Tampa area. I made the move myself some years back after more than 20 years managing large funds for some of the most prestigious firms in NYC – now, some of those very firms are discovering what I have learned, that the weather, costs, and culture make both living and working a lot easier.
Each investment company that chooses South Florida as a region to grow its firm, brings even more sophisticated investors and dealmakers to those already in the state —face-to-face networking is now high caliber and done with ease. Everyone in the industry is benefitting from the closer proximity to each other and being able to meet and make introductions in an environment that, in my opinion, is much more conducive to making acquaintances, building trust, and even having some fun.
Florida is a Disruptor
My old firm, Goldman Sachs, just built out 35,000 feet of office space in the Miami, Brickell area. This is on top of their ongoing presence in Miami and West Palm Beach. They aren’t alone, the absence of a state income tax, coupled with a government that is business-friendly helped prompt hedge fund billionaires and native New Yorkers Paul Singer and Carl Icahn to relocate their firms to Florida.
Other prestigious firms have done the same; Blackstone opened an office in Downtown Miami in 2021. Citadel, relocated its headquarters from Chicago to Miami in 2021. D1 Capital Partners, a hedge fund, announced plans to relocate to South Florida in 2022. Merrill Lynch expanded its presence within Florida a bit sooner, 2020. Hedge fund, Tiger Global Management, announced plans to relocate to South Florida in 2022. In November of 2022, fund manager Ark Invest founded by Cathie Wood moved its headquarters out of NYC to St. Petersburg, FL. And the list goes on, and is growing.
In addition to lower costs of business, the areas these companies are moving to offer an educated base and a financially astute talent pool from which to hire.
And the financially savvy populous is getting deeper as professionals looking to relocate out of colder, high tax states, are moving down and becoming part of the already strong ecosystem. The ever-increasing depth of players include experienced attorneys, accountants, bankers, consultants, insurers, IT experts, and others with which to conduct world-class business dealings.
The other ingredients are here as well. Asset managers require convenient public and private executive airports. Local officials must also be conversant enough in their industry to regulate it intelligently, S. Florida checks both of those boxes too. It takes more than one large asset management firm to generate a demand for services sufficient to build the critical mass necessary to sustain an ecosystem. Florida has passed the tipping point and has already been labeled “Wall Street South.”
Florida Infrastructure
The ecosystem also includes facilities for tradeshows, networking events, and conferences. As an example, this coming December 3-5, Noble Capital Markets, a boutique investment bank located in Boca Raton, FL, will hold its massive, 19th annual investment conference, NobleCon19, at the 52,000 square foot, state-of-the art facility just opened on the Florida Atlantic University campus (FAU), in Boca Raton.
Noble’s 19th Annual Small-cap Investor Conference has been the “must-go” event in the area for 19 years. In 2023 the Noble can now expand this annual event into a facility that boasts the latest technology and conference facilities. This means investors and presenters at NobleCon19 will have an ideal setting to discover new opportunities and more room to welcome and network with the areas new financial executive neighbors, along with other attendees from across the globe.
From Good to Great
There are three defining factors that have helped the S. Florida region grow from an area with many small and mid-size financial firms to a strong and expanding financial center.
In no particular order, these include:
Greater reliance on virtual teams now makes physical proximity to key players less important . Even as many firms reel staff back into the office, companies are far more comfortable reaching team members virtually.
More associated professionals are moving to the emerging centers. When major investors and financial services giants such as Goldman Sachs, Blackstone, Citadel, Ark Invest, and Icahn Enterprises set up shop in a location, expertise follows. This is almost a requirement in sectors such as private equity, where deals are paved by personal relationships, social networks and professional networks.
The major cities in Florida already have existing professional and educational infrastructures. Of course, if the firms leadership is from out of town, it will naturally have a bias in favor of the schools they attended or are familiar with. But it is becoming easier to lose that bias when they learn that, for instance, in Palm County, Florida Atlantic University College of Business’ Executive Education just earned a prestigious global endorsement in the 2023 Financial Times rankings for open enrollment professional education programs – FAU ranked No. 2 in the United States.
Home Life
As one might imagine, with thousands of highly paid professionals looking for homes and “their new favorite restaurants” that real estate values are increasing and entire neighborhoods are becoming wealthier at every level. This growth feeds on itself and the improvements draw more top talent that then call South Florida the place they live and work.
Take Away
South Florida lost its reputation as a large retirement home where Grandma lives, and is now seen as an emerging financial powerhouse where big and small financial firms want to be to do business, grow their network, and live a better life.
With modern infrastructure, lower costs, top professionals, entertainment, and state of the art conference facilities, the trend is likely to continue.
Managing Editor, Channelchek
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