South Florida has always been a hot spot for New York City’s elite, as the weather and entertainment scene make it the perfect place to head for a weekend or longer in the winter. But COVID-19 encouraged many of NYC’s wealthy to spend a lot more time in the area, escaping the heavy caseloads and restrictions in the Northeast.
The pandemic has also created a newly mobile workforce where employees and employers are comfortable working from anywhere, and executives are conducting an increasing amount of business remotely.
These factors, combined with the beautiful weather, comparatively inexpensive real estate, and zero income tax, make South Florida an attractive place for many New Yorkers to set up permanently. And some NY financial firms are following suit by establishing offices in the area, too.
Here’s a look at what’s currently happening with financial services companies relocating to South Florida and what it could mean for commercial real estate.
New York City was hit particularly hard by the coronavirus, particularly in its first few months, causing many Wall Streeters to head south. Even with the pandemic declining, the trend continues as some large financial firms test South Florida’s waters. Notable examples include:
Executives can handle much of their work remotely, so setting up somewhat smaller offices in South Florida and living there full-time while enjoying the weather and tax benefits is attractive. This trend could see the region become an increasingly significant player in the global financial industry.
We know that many northerners, for the most part, love the benefits of living in South Florida. The main reason for staying in New York is that it’s the world’s financial hub, and they felt the need to be close to everything. Since there is increased comfort with conducting business from anywhere, it makes sense that we could continue to see executives relocating to South Florida and taking smaller divisions of their empires with them.
However, New York may have been down during the pandemic, but it’s not out. And residual loyalty to Manhattan and the prestige of working and living there retain appeal. We could see some more youthful firms and portions of companies set up some operations in South Florida. Much of this trend depends on how quickly New York City and other large urban areas bounce back and how related trends, like remote work, smaller offices, and even a shift to the suburbs play out long term.
On the surface, it might seem evident that financial firms relocating to South Florida will encourage a great deal of development.
However, we might not see a significant influx of new, mammoth office buildings in South Florida. The reason is that office work, in general, is changing. And these firms could allow many employees to work from home or stay back in New York.
There could be demand for different types of offices for these financial firms, as they prioritize adaptive spaces that cater to a more mobile workforce. For example, a hedge fund that sets up a headquarters in Miami would likely retain an office in New York—or vice versa. And the overall square footage needed may be lower, as many companies adopt hybrid onsite-remote work arrangements permanently.
We’re also seeing the emergence of a reimagined office environment that very few anticipated before the pandemic. Commercial real estate investors should keep a close eye on the changing needs of those looking for office space.
Miami—or South Florida overall—probably isn’t destined to take the crown of the world’s financial hub from New York City anytime soon. But technology and new work paradigms are blurring these lines, and our region looks like it’s gaining ground.
Morris Southeast Group helps commercial real estate investors remain current on the latest trends as they look to expand their portfolios. To learn more, call us at 954.474.1776. You can also reach out to Ken Morris directly at 954.240.4400 or firstname.lastname@example.org.