Miami Nice – Business is Booming in the Sunshine State
04 August 2020
Recently some of the largest US hedge fund and tech companies have set up satellite offices in South Florida. We look at how the working from home (WFH) revolution is helping evolve the post-pandemic workplace, and why Miami’s business-friendly regime and welcoming climate could make it the new US commercial capital.
For decades financial services companies have opted to base themselves in an eight-block area around Wall Street in New York’s Manhattan district.
Meanwhile, US tech companies have centred around Silicon Valley near the West Coast city of San Francisco.
But a slow shift has been taking place; more and more companies in both industries are discovering the benefits of a South Florida base.
Businesses moving to Miami
Bloomberg reported how Schonfeld Strategic Advisors and its hedge fund rivals Elliott Management, D1 Capital Partners, Citadel, Balyasny Asset Management and Millennium Management LINKL have all set up offices in Florida.
Bloomberg notes New York City’s wealthiest companies now face the highest state and local rates in the US.
Below is an illustration of the rates as at November 2021:
|Corporate Income tax||8.84%||5.5%||7.1%|
|Personal Income tax||1.25% – 10.55%||None||4% – 8.97%|
Additional to the rates shown above, Federal Income Tax Rates apply to every individual. The IRS recently announced adjusted federal Income Tax brackets for the 2022 tax year, meaning the changes will impact tax returns filed in 2023. The tax brackets applicable for Federal Income Tax for 2022 will be between 12% and 37%.
Funds in the Sun
Prequin, a provider of data to alternative asset managers, said the number of active hedge fund managers in Florida grew from 193 at the end of 2019 to 290 in early 2021, accounting for over $96bn in assets under management.
The Palm Beach Hedge Fund Association, which has seen its membership triple since March 2020 doesn’t believe that New York will be completely supplanted as the US hedge fund capital, but it does expect most hedge fund companies to have some kind of presence there.
Miami takes Manhattan
Attracting younger talent also means recreating Manhattan’s social scene. Financiers who used to do their power broking in Harry’s – the famous bar in lower Manhattan – now have their very own version in Rosemary Square, West Palm Beach.
It’s not just New York firms heading to the Sunshine State. Balyasny Asset Management has expanded its Chicago headquarters by opening a Miami office on Bayshore Drive.
Miami as a motivator for talent
The quality of life and the climate are big marketing tools according to Michael Goodman, managing partner at New York-based recruiting firm Long Ridge Partners.
He told Financial Times’ Fund Fire publication how the move to work remotely meant he could now recruit talent beyond New York.
“It is a destination now and it’s on people’s radar,” he said. “It used to be that New York, Chicago, San Francisco and Austin were the big hot spots. You can now look anywhere from Palm Beach to Miami being in there as well.”
Josh Koren, founder and CIO of Musketeer Capital Partners, a long/short equity hedge fund founded in 2020 who lived in New York for 11 years told Fund Fire how he chose Miami Beach for his firm’s location and how his team members are in the process of moving to the state.
“I decided to set up shop in Florida because I thought the quality of life is better,” he said, adding his belief that fresh air and space help manager performance. “It’s very good for the mind, soul and body, and I found my mental capability has become sharper.”
Tech firms turn East
Tech firms have also started a South Florida invasion, according to Forbes. Companies from San Francisco and Silicon Valley cite soaring commuter costs and subsequent lockdowns as motivators for moving to South Florida.
Until recently Texas proved the preferred alternative. Elon Musk the CEO of Tesla relocated there and the New York Times reported that of the 653,000 plus people who left California in 2020, about 82,000 went to Texas, more than any other state.
However Texas may prove to be a temporary location, if Francis Suarez, the Republican mayor of Miami, has anything to do with it.
Venture capitalist Delian Asparouhov as reported by Forbes appears to have inspired Suarez to start a relocation movement.
His Tweet “ok guys hear me out, what if we move silicon valley to miami?” got over 2 million impressions and a reply from Suarez of: “How can I help?”
Suarez is reported to be courting Elon Musk, Twitter CEO Jack Dorsey, former Google CEO Eric Schmidt and Peter Thiel, the chairman of Palantir.
Suarez is offering Silicon Valley wavers a big warm hug, determined to show that while California doesn’t show them the love and attention, the business-friendly mindset of South Florida has already prompted hedge fund billionaires and native New Yorkers Paul Singer and Carl Icahn to relocate their respective businesses there.
How ZEDRA can help
ZEDRA’s Tomas Alonso has been based in Miami for over 25 years helping companies and entrepreneurs to optimise their affairs locally be providing Company Incorporation & Management Services, Accounting & Bookkeeping, Payroll & HR, Property Management and more. If you would like to know more about Miami’s growing business community or you are considering setting up in the Sunshine State, please contact Tomas Alonso and his team.