Photo: Scott Wiseman
Florida's business relocation boom
The pandemic has sparked a boom in business relocations to South Florida and other parts of the state. Economic developers don't see a letup any time soon.
A decade or so ago, Kelly Smallridge and her colleagues at the Business Development Board, Palm Beach County’s economic development agency, launched an initiative called Behind the Gates to try to lure Wall Street CEOs with second homes in Palm Beach to open offices in the area. It worked, to a degree. Several firms opened 2,000to 4,000sq. ft. satellite offices with a dozen or fewer employees. “They would use it as an office whenever they came to town for their second home — and that excited us. We were happy to get the space absorbed. Happy to get the names in our county, even if it wasn’t 12 months out of the year,” Smallridge says.
Then COVID19 hit. “Those 2,000 to 3,000 or 4,000sqft. offices now started to sign leases in the range of 10,000 all the way up to 50,000 square feet — and company executives began to legally domicile in Florida, which means you have to be here for six months and a day,” Smallridge says. They arrived with families in tow, fueling an enrollment stampede at Palm Beach County’s private schools. Today, many of those schools are full — “no seats open” — says Smallridge.
Among the big-name relocations are Elliott Management, Paul Singer’s $42-billion hedge fund, which moved its headquarters from Manhattan to West Palm Beach earlier this year, and Point72 Asset Management, a hedge fund owned by billionaire Steve Cohen, which decamped 45 employees from Connecticut to West Palm Beach over the summer. New York-based Virtu Financial, an electronic trading firm, is also setting up an office in Palm Beach Gardens that will eventually house 55 employees. Doug Cifu, CEO of Virtu Financial and co-owner of the Florida Panthers hockey team, told West Palm Beach’s local NBC news station he’s had no second thoughts about the relocation. “We ain’t going back,” he said.
Amid all the movement, demand for office space is surging. The Related Companies' new 300,000-sq.-ft., 20-story office building in West Palm Beach — 360 Rosemary Square — has filled up with tenants, including Elliott Management, Cohen’s Point72 and Goldman Sachs, which has been running online ads for dozens of jobs in the city. NewDay USA, a mortgage lender that targets military veterans, will move 600 employees into the building when it opens its second U.S. headquarters (its first is in Fulton, Md.) this fall. Other new buildings are in the works. Over the summer, Related purchased a 2.5-acre site where it’s planning to build a 25-floor skyscraper called One Flagler. Cohen Brothers Realty is moving forward with plans to build a 24-story office building, with 447,485 square feet of office and retail space called West Palm Point.
Palm Beach isn’t the only region benefiting from pandemic-prompted relocations. A growing list of financial and technology firms, ranging from Goldman Sachs to Blockchain.com, have recently relocated to Miami. With more remote work options than ever before, working-age people without Florida-based jobs are also flocking to other parts of the Sunshine State. Researchers from LinkedIn’s Economic Graph Team analyzed migration patterns in 38 major U.S. metropolitan areas between April 2020 and February 2021 to see what regions were attracting the most new residents, and three Florida metro areas were in the top 10: Jacksonville (No. 2), Tampa-St. Petersburg (No. 6) and Miami-Fort Lauderdale (No. 9).
Smallridge doesn’t predict a falloff in activity in the near term and isn’t worried it will grind to a halt. If history is any guide, new catalysts will come along. “Back to the days of Gov. Jeb Bush, when he brought (Scripps Research Institute and the Max Planck Florida Institute for Neuroscience) to Florida, that created a wave. Back in the 1950s, when one of the largest aviation companies, Pratt & Whitney, came to Palm Beach County, that created a wave, and when IBM landed in Boca, that created a wave,” Smallridge says. “While this wave may end in five years, there may be another wave of something else. I’m not a firm believer in five-year strategic plans because I never could have predicted COVID.”
“Over the past five years, Florida has grown manufacturing jobs by 6%, where the U.S. lost 1.7% of its jobs. Florida’s second in job growth, only to Texas, and only by about 1,200 jobs. We’re doing much better than the other southeastern states — Mississippi, Tennessee, North Carolina. They’re actually losing jobs. We’re No. 5 for the job growth rate in manufacturing. Only some western states where people are leaving and moving to Nevada, Arizona, Utah, Idaho, they’re the only ones growing at a faster rate than us, but we’re still growing by more jobs than they are.”
— Jerry Parrish, chief economist and director of research, Florida Chamber Foundation
Read more in Florida Trend's October issue.
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