Are Texas and Florida the New California and New York?

• Texas and Florida challenge California and New York respectively, but will they replace them?
• Tech elites from Silicon Valley have flocked to Texas, mirroring the Big Apple financiers on the east coast fleeing to Florida.
• They all crave warm weather, affordability, and low taxes because they leave behind a higher cost of living.
• Texas and Florida may never really replace California and New York, but the rivalry is real, positioning the southern states as real powerful players.
• Visit the Business Insider homepage for more stories.

Sunnier places, lower taxes and a more affordable cost of living. The California tech elite and New York financiers are on the hunt for the three, and they’ve found this trio in Texas and Florida.

In the west, there’s an exodus from Silicon Valley to Texas, featured by Elon Musk and Oracle’s moves to the Lone Star State. And on the east coast, there’s the exodus from Wall Street to Florida, marked by the relocation of Charles Schwab himself and reports of Goldman Sachs moving some of its operations to the Sunshine State.

The rise of remote working in the era of the pandemic has prompted businesses and the people who work there to re-evaluate their location and the lifestyle that accompanies it.

The ensuing migration turns the income-tax-free lands of Texas and Florida into the California and New York equivalents of 2020, but in reality only for now.

Silicon Valley is heading for Texas

San Francisco’s rising costs, security and political climate are pushing some tech elites out of San Francisco, Business Insider’s Meghan Morris and Berber Jin reported.

And it’s not just the bigwigs who are reconsidering their lifestyle. More than a third of Bay Area tech workers said in a recent survey that they would consider leaving if they could work remotely all the time.

As fleeing Silicon Valley residents scattered all over Miami to Denver, most flocked to Texas. Austin, long at the center of the Texas tech scene, has been a particular hot spot. Dropbox CEO Drew Houston and Opendoor co-founder JD Ross move to the city, while companies also move there, including software giant Oracle and venture capital firm and co-founder from Palantir, Joe Lonsdale.

Reuters / Robert Galbraith

Tesla also has a Cybertruck plant under construction in the area. Its founder and CEO of SpaceX, Elon Musk, is the latest high-profile tech personality to announce a move to Texas, but it’s unclear where in the state he’s moving.

Even Houston has attracted tech talent, with Hewlett Packard Enterprises moving their headquarters there from San Jose.

“There are a lot of people who have already moved that haven’t been written about it get enough media coverage,” venture capitalist Keith Rabois, who has been to Miami instead of Le Mans, told Morris and Jin. Texas. He declined to name who else left. “After COVID, I think the concentration of talent has atrophied, perhaps permanently.”

He said that before the pandemic, San Francisco’s place at the top of the tech hierarchy outweighed its aversion to the city, but remote working blurred that hierarchy.

Wall Street flocking to Florida

As California’s tech elite pack their bags for Lone Star State, New York financiers are trading skyscrapers for sunshine in Florida.

The hedge fund Elliott Management moves its headquarters to West Palm Beach. His co-director of investments, Jon Pollock, is said to have lived in his West Palm Beach home during the pandemic. Charles Schwab, founder of the eponymous brokerage and asset management giant, also moved to Palm Beach this year, according to voting records.

Blackstone, the world’s largest private equity firm, based on Park Avenue in Manhattan, is opening an office in Miami with plans to create up to 215 tech-focused jobs there. More recently, Goldman Sachs considered moving asset management operations out of New York City, Bloomberg first reported.

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Business Insider recently spoke with 13 finance and real estate professionals about Florida’s rising lure amid the pandemic, many of whom described an increase in larger and longer office leases by companies. outside the state and a declining high-end real estate inventory Big Apple financiers are flooding the region.

Stephen Rutchik, executive general manager of Colliers’ office services for the South Florida region, told Business Insider during these discussions that low taxes, warmer weather and a low-key vibe have attracted financial services firms. these last years.

But interest really burst in July, he said, when the industry became more comfortable with remote working. Rutchik said his team is enjoying unprecedented interest, with the volume of calls from potential tenants increasing “overnight” to “torrential” levels.

“We visit hedge funds on the side of our agencies one to three times a day,” he added.

CA and NY are still on top, but TX and FL are officially in the game

While Texas and Florida are in the limelight as new hot spots, experts say they will fail to dominate Wall Street in New York and Silicon Valley in California.

Jonathan Woloshin, head of real estate and financial research at UBS, told Business Insider that Texas and Florida have been and will continue to be the beneficiaries of population, employment and business growth, and that the influx of jobs will contain a higher percentage of “front-line work as opposed to back-office functions. But that’s not necessarily the” new “California and New York, he added.

Ron Conway, the founder of SV Angels who has been called “the Godfather of Silicon Valley,” recently told Business Insider that this was not the end of Northern California’s dominance.

“The challenges of the Bay Area can be frustrating, sure, but there is still no place on earth like Silicon Valley and the San Francisco Bay Area when it comes to talent, access. to capital and the technological ecosystem for the startups that created it. many successful companies and founders, ”he said.

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When it comes to Florida, several experts Business Insider spoke to previously highlighted a few challenges that could ensure the real Wall Street clings to its basic position: a tighter job market, relocation costs. expensive and a dearth of luxury homes available, to name a few.

Across the pond, similar fears that London would lose its luster after the Brexit vote have (so far) proven to be unfounded. Although UK fund managers predict that 16% of asset management jobs in Britain will be relocated, a Financial Times survey found that the majority of international banks and asset managers have actually increased their numbers. employees in London since 2015.

California and New York may remain unprecedented in the long run, but Texas and Florida’s high status as current top attractions could give the top two a run for their money.

Woloshin said as individual wealth is concentrated in Florida and Texas, it is likely that more venture and private equity fundraising and investment could take place in both states.

“New York and California are likely to remain strong business destinations given their attractiveness to the talent pool,” he said. “However, in the future, they won’t be the only game in town when it comes to high quality jobs and wealth creation.”