Since 2011, one million people have left the areas of New York, New Jersey, Pennsylvania, and Connecticut for other states. Bloomberg estimates that 277 people were leaving New York City every day prior to Covid-19. These departures are largely due to The Big Apple's notoriously expensive real estate and taxes, both for individuals and for businesses.
Commercial taxes in particular, are one major draw influencing the southern migration. In Florida, there is no corporate income tax on limited partnerships and subchapter S-corporation. There is also no property tax on business inventories, no sales tax on goods manufactured or produced in Florida, and no sales tax on cogeneration of electricity. In larger, overpopulated cities, there are taxes on all of these. It is expensive to own commercial property in dense, Northeastern cities, even for billionaires.
Carl Icahn, the founder of Icahn Enterprises, formerly known as American Real Estate Partners, left his home state of New York last month after almost 60 years of doing business there. He uprooted his business and his staff, offering them a $50,000 severance in moving fees. He moved Icahn Enterprises to the Tampa - St. Pete region in hopes of creating a better life for his employees and his business.
Icahn is one of the first to publicly declare movement during the coronavirus pandemic, but he probably won’t be the last. One thing this pandemic has done is showcase how many employees can actually work from home. With this, commercial real estate may downsize as it is not completely necessary. If a business is making this move, they can create a smaller headquarters for a lot less money in the southern states, and still run the same business.
While smaller southern cities residing in the Carolinas, Georgia, and Florida are not as densley populated with HQ companies as New York City, they are the places where new graduates and potential employees are located or would love to relocate. St. Petersburg, in particular, has emerged as a talent hub with 91 colleges and universities within a 100-mile radius. In fact, St. Pete’s annual growth rate has tripled since 2010 with 150 people moving to the Tampa-St. Pete region every day.
St. Petersburg is a great example of a thriving city that obtains a good quality of life for all its citizens. The weather is impeccable, the businesses and social scene are trendy and the city feels like a close-knit community.
Forbes states: “You can no longer simply think of New York or other big cities as the only destination. You need to figure out where can you find the best jobs and lifestyle for yourself. It's imperative to factor in the quality of life, how far your salary will go, and future growth opportunities when navigating your career.”
Those who relocate to St. Petersburg seem to quickly find their niche. St. Pete is home to seven arts districts, with a museums and galleries galore for the arts and culture lovers. For sports fanatics, the Tampa Bay Rays, the Tampa Bay Buccaneers, the Rowdies, and the Lightning bring crowds from near and far. And, on Saturday morning, residents and visitors alike gather with 125 local vendors, business owners, live musicians, and artisan favorites for the Saturday Morning Market- one of the largest in the Southeast.
Last year, Founder & CEO of Dynasty Financial Partners, Shirl Penney, moved his business and family from Manhattan to St. Petersburg.
Penney said, “For a business that is growing quickly like us, being able to add operating margin by lowering expenses while also enhancing the quality of life for our employees is a win-win for everyone. And as a kicker, the sunshine was free!"
Specifically in Florida, Chiquita International moved from Cincinnati to Charlotte, to Fort Lauderdale. XoJet Aviation leaving from California to Fort Lauderdale, and iQor from New York City to St Petersburg.
“When I moved here with iQor after we relocated our corporate headquarters from Manhattan, I wasn’t sure what to expect, but I have been pleasantly surprised by the strength of the technology community and talent,” says Bryce Engelbrecht, SVP Data Solutions & Analytics at iQor. “A growing recognition of St. Petersburg as an up and coming place to live and work should present a powerful message for folks in traditional tech hubs.”
The “Delocation” trend has been growing for some time now. Even tech company, Zapier, has announced financial support for workers who want to move out of San Francisco, where they are headquartered. The remote company offers packages for its workers and were hoping to have more workers in cities with a lower cost of living and happier residents than San Francisco.
Even for remote companies, employers want their employees to feel comfortable where they are living and to be in a place where extra income can support them, instead of going to high rent costs. This is especially important, moving forward in COVID-19 times.
Earlier this month, Elon Musk tweeted that he would be changing Tesla’s location due to the lack of support for business opening in Alameda County, California. Due to COVID-19, Musk has been unable to organize and plan on opening, which made him want to consider relocating states. Multiple southern states are having more conversations on protecting businesses through this pandemic, and opening them up as soon as safely possible.
Florida, specifically, has many benefits to encourage business growth with technical assistance, liability protection, and regulatory benefits that make up a relocation package that’s hard to resist. Plus, development areas can offer assistance in growth.