COVID speeds up financial and tech company relocations to Florida
Eye Popping —Even for Palm Beach
The island of Palm Beach lends itself to the extravagant. But even by Palm Beach standards, the last year in real estate there has amazed.
New York private equity figure Scott Shleifer set a record for Palm Beach and likely for Florida by paying $122.7 million for a specbuilt oceanfront home. Developed by Mark Pulte of Boca Raton-based Mark Timothy — Pulte is the son of the founder of Pulte Homes — the house sits on part of a six-acre site Donald Trump sold in 2008.
The chronicler of all things Palm Beach, the Palm Beach Daily News, has reported that the county clerk recorded 20 homes that sold for more than $20 million in 2020, double 2019’s tally. The rush by refugees from COVID, state income taxes or dreary winters shows no signs of abatement.
Asset manager and billionaire Janie Goldman sold the renovated former Kennedy winter White House oceanfront estate for $70 million, more than double what she paid in 2015.
David Tepper, the hedge-fund founder and Carolina Panthers owner who is one of Florida’s richest men, paid $68 million for an estate.
A spectrum of buyers from the Northeast, California, Midwest and Canada, young families and senior financiers make up the buying binge.
“Palm Beach is pretty much the center of the universe from a real estate perspective,” says Jay Phillip Parker, CEO for Douglas Elliman’s Florida brokerage. “We’ve seen prices and velocity go through the roof while at the same time inventory is at an all-time low.” — By Mike Vogel
Florida is one of nine states that do not have a personal income tax. It also does not have an estate tax or a capital gains tax, and its corporate taxes are low compared to those of California, Connecticut, Illinois, Massachusetts, New Jersey and New York.
The 2017 federal tax law, which reduced the amount of state and local taxes that high-income earners can deduct on their annual taxes, fortified Florida’s tax advantages.
According to Miami’s Downtown Development Authority, a person who makes $1 million a year pockets about $640,000 in Miami vs. $590,000 in Chicago, $535,000 in New York and $532,000 in California after taxes.
Wealthy out-of-state transfers to Florida might also find their money goes further when it comes to housing. “We’re going to be the most expensive project in Tampa, and we’re going to be selling units for around $850 a square foot,” says Jon Paul Perez, president of Miami-based Related Group, which plans to develop a 27-story Ritz-Carlton condo tower and 12 townhomes on Bayshore Boulevard in Tampa.
Perez says Related will market the luxury units to potential buyers in California, the Midwest and Northeast, among other places. “For $850 a square foot in New York, you would be living in, like, workforce housing,” he says.
‘For the Best’
David Blumberg Blumberg Capital
A fourth-generation Californian, David Blumberg grew up in Fresno, an agricultural town in the state’s inland Central Valley. He went to Harvard and planned to become a diplomat, but he changed his mind about working for the government after interning in Washington, D.C.
“I decided, I don’t think this is the place that’s solving problems. I think it’s causing more problems than it’s solving,” he recalled in 2019. “At the same time, I was running a business at Harvard” — a campus newspaper distribution service — “and I thought, wow, even in a boring little business like this, it’s so much fun to be an entrepreneur.”
Blumberg got his MBA from Stanford and spent several years managing investments for private equity firms and family offices. In 1991, he founded Blumberg Capital, a venture capital firm based in San Francisco.
With more than $650 million in assets under management, Blumberg Capital invests in early-stage technology startups in North America, Israel, Germany and the U.K. and is now expanding to Latin America.
Last year, Blumberg joined what some are calling the Silicon Valley exodus to Florida. “Big news, bittersweet news, but for the best,” he wrote on Facebook in late November. “As of last night, we have moved out of California, and are now happier residents of southern Florida.”
Blumberg, who is openly gay — Business Insider named him one of the “23 most powerful LGBTQ+ people in tech” — has two schoolaged children with his partner. He also is an outspoken Republican. He supported Donald Trump for president and contributed more than $400,000 in 2020 to help get Republican candidates elected to national offices, according to the website OpenSecrets.org.
In a recent Zoom interview from his home office in Golden Beach, a waterfront enclave in north Miami-Dade County, Blumberg expressed frustration with the governance of California, citing high taxes, regulatory burdens and other issues like rising homelessness. He says his decision to leave California “was based on the realization that I could work anywhere and remain highly productive and engaged. I’m joining a wider trend of investors and entrepreneurs who are relocating to emerging tech hubs such as Miami, Austin and Nashville.”
He says he finds the diversity of thought in South Florida a refreshing change from San Francisco, where his political views made him an oddity in his former neighborhood of Haight- Ashbury. He says he has talked with Gov. Ron DeSantis and Miami Mayor Francis Suarez, both Republicans, and is impressed with their commitments to attracting investment and stimulating growth. He quotes former Citibank Chairman and CEO Walter Wriston, who liked to say that capital goes wherever it is wanted and treated well.
During their meeting, DeSantis asked Blumberg, “What should we be doing,” Blumberg recalls. “I said, ‘well, as far as I can tell, you guys are doing pretty well, so keep it up and maybe don’t follow the examples of the places that people are leaving.’”
Blumberg’s firm employs more than two dozen people in San Francisco, Miami, New York and Tel Aviv. “We’re growing and expanding,” he says. “Business is going incredibly well.” He says Miami is an ideal place to look for new investment opportunities in Latin America. And when he and his family want to escape the summer heat, he says, Colorado is only a plane trip away.
“We know it’ll get hot here and there will be storms. We’re not little flowers that will wilt,” he says. “We’re here to contribute. We want to be builders of this community, and we want to spread the good things that are happening in Florida to other parts of the country. I’d love California to rise to its potential, as well.”
In December, when a California venture capitalist suggested on Twitter that Silicon Valley move to Miami, the city’s mayor, Francis Suarez, replied in four words: “How can I help?” The tweet went viral and became a catchphrase for Suarez, who describes it as “sort of an earth-shattering moment.”
“People were like, ‘Oh, finally, an elected official that gets it,’ that understands having companies that are building wealth and creating high-paying jobs is something that benefits a city,” Suarez told financial news channel CNBC.
Earlier this year, Suarez put up a billboard (pictured) in San Francisco laying out the welcome mat to tech entrepreneurs and investors.