According to U.S. media reports, Wall Street giant Goldman Sachs Group is considering establishing an asset management base in Florida and taking the opportunity to move more businesses and jobs out of New York, which poses a potential blow to New York’s status as a global financial center.
Analysts believe that a COVID-19 epidemic has caused a large number of enterprises in the United States to adopt telecommuting, which not only shakes the status of the traditional central business district, but also challenges the established business and financial centers. New York naturally bears the brunt, but it will not be the only victim.
Important departments of Goldman Sachs moved to other states
According to Bloomberg on December 6, Goldman Sachs Group is considering a new headquarters in Florida to accommodate its asset management department.
According to people familiar with the matter, executives of the group have been looking for office locations in southern Florida and have contacted local officials to discuss policy support such as tax incentives.
Goldman Sachs’ newly restructured asset management department generates about $8 billion in revenue every year, which is an important pillar of the diversification of the group’s business model.
In recent years, asset management business has accounted for about a quarter of the group’s revenue and is one of the core businesses of the group.
Many market participants believe that if Goldman Sachs moves out of the business, it may trigger other financial institutions to follow suit, thus affecting New York’s status as a “financial center”.
For many parts of the United States, if a “Wall Street giant” like Goldman Sachs can establish a local base for its asset management department, it can drive jobs and taxes and have a set of supporting economic effects.
For companies like Goldman Sachs, long-term telecommuting this year has proved to work, so many executives believe that moving more departments from New York to other regions can save money.
Goldman Sachs internally announced a cost control cut of $1.3 billion this year, and measures to move employees to “cheapier places” can help achieve this goal.At present, it is not clear how many people will eventually go to Florida, and other regions may also accept these “New York visitors”.
According to people familiar with the matter, Florida may not be the final choice of Goldman Sachs, and other regions such as Dallas may also be one of them.
For Wall Street giants with rich bargaining chips, local governments that can provide more favorable policies such as taxation and land are bound to be given priority.
Enterprises move to low-cost areas
At the beginning of the COVID-19 outbreak, Wall Street giants, including Goldman Sachs, promised to avoid mass layoffs, but as the epidemic was delayed to be effectively controlled, bank executives began to pay renewed attention to cost control plans. At present, Goldman Sachs is preparing to carry out a second layoff in three months.
Although the number of layoffs is not expected to exceed the 400 in the first round of layoffs in September, it still caused shock in the circle, and many people joked that New York is “full of unemployed bankers”.
The group’s senior management even expects that in order to fulfill the promise of controlling costs, the number of layoffs will be further increased in 2021, which may set the record for the largest layoffs in Goldman Sachs’s history.
In this case, it is not unexpected to move some of the business and positions out of New York, the most expensive in the United States.
At present, due to the relative decline in the importance of the central business district during the epidemic, many enterprises have chosen to move out of New York to look for places where taxes and living costs are more advantageous.
Affected by the COVID-19 epidemic, Manhattan, an inch of land and gold in New York City, has become more like an “empty city”.
According to the latest report of the real estate investment company Gaoli International, the vacancy rate in the region rose to 12.9% in October this year, the highest level since 2004.
The related business supporting economy continues to be in a depression due to the large number of employees of financial giants such as Goldman Sachs Group, JPMorgan Chase, Bank of America and Morgan Stanley who are still working from home.
According to a new report by Miller Samuel, a real estate valuation agency, and Douglas Elliman, a real estate agency, the median rent of apartments in Manhattan fell 19% year-on-year in October, the largest decline on record.
Florida, on the other hand, has been a strong competitor for New York to retain financial institutions and talents. The state’s warm weather and zero-personal income tax policies have appealed to wealthy Americans for years.
But until 2020, it will be difficult for Florida to “dig” the top talents from Wall Street. Most of the moving hedge funds are relatively small. For example, although Deutsche Bank has established the Jacksonville campus, its staff there are mainly responsible for back-office and other support functions.
Until this year, the relocation of large financial institutions and top fund managers, boosted by the epidemic, began to show a strong momentum.
Bloomberg analyzed that the spare office space in Manhattan, New York, has reached the peak after the September 11th terrorist attacks.
While restaurants, bars and physical retail stores are fighting for survival, New York is trying to prevent white-collar workers from fleeing to states with more relaxed tax systems and lower cost of living.
Goldman Sachs Group, as a landmark company on Wall Street, now has a shadow over the future of the city.