Ken Langone, Chairman and Co-Founder of Home Depot Inc (NYSE:HD) was on Fox News recently, and voiced concerns regarding the future of NYC. Not only were many flocking away from the city due to another lockdown, but the latest news concerning one of the largest investment banking enterprises by revenue, Goldman Sachs Group Inc (NYSE:GS) reinforces a clear long-term trend.
New Yorkers are leaving NYC to settle in Florida.
In the interview, Mr. Langone also shared his feelings concerning both Governor Mario Cuomo, and NYC Mayor Bill DeBlasio, and how they seem to be losing touch with the realities of the city. Mr. Langone himself may also consider leaving New York if things do not improve.
On their side, Goldman Sachs has been a New York City icon for more than 50 years. Founded in 1869 by Marcus Goldman, the firm expanded in 1882 to include his son-in-law Samuel Sachs, and expanded again in 1885 to include his son Henry, and additional son-in-law Ludwig Dreyfuss. From then on, it became known as Goldman Sachs & Co.
As we head into 2021, the firm is not only an American leader, but is known across the world. In tandem with their move, many other Wallstreet investment banks and hedge funds are also leaving the colder winters of the island to enjoy the warmer summer of the sunshine state. As reported in the NY Post in October, billionaire Paul Singer is moving the headquarters of his hedge fund Elliott Management from Manhattan to Florida, while Carl Icahn also made the switch in 2020. Same lie true for other financial institutions like Blackstone, and Citadel who have also boosted their presence down south.
But why would the wealthiest want to do this?
Just for the weather?
Probably not.
But if history has taught us anything, it’s that places like New York became what they are today due to their access to waterways. Over time, it made sense to stay there, as the effort required to leave was always a little too great for the elite.
Fast forward, and here we are. Discounting CV19, travel has become a lot easier, Florida has better weather, and the state offers a large savings on how much tax must be paid.
Back in New York, the Mayor, Governor, and it seems the entirety of New York’s political class has shown a disdain for capitalism and private property, instead behaving in a way that drives out major job creators and taxpayers. NY Governor Andrew Cuomo issued a plea for New Yorkers to return to the Big Apple, unfortunately his offer to buy cocktails doesn’t appear to be solving the city’s economic woes.
Although many believe that CV19 is the root of all evil, the truth is the exodus started long beforehand. As reported by Forbes last September, close to a million people said goodbye to New York City and the tri-state area over the last decade. While the pandemic may have exacerbated the stampeded, it certainly was not the cause of it.
Listen to New York City Mayor Bill de Blasio, who said the following to New York Magazine in 2017.
“What’s been hardest is the way our legal system is structured to favor private property. I think people all over this city, of every background, would like to have the city government be able to determine which building goes where, how high it will be, who gets to live in it, what the rent will be.
I think there’s a socialistic impulse, which I hear every day, in every kind of community, that they would like things to be planned in accordance to their needs. And I would, too.
Unfortunately, what stands in the way of that is hundreds of years of history that have elevated property rights and wealth to the point that that’s the reality that calls the tune on a lot of development….
Look, if I had my druthers, the city government would determine every single plot of land, how development would proceed. And there would be very stringent requirements around income levels and rents. That’s a world I’d love to see…”
I know NYC cannot compete with the warm climate that Florida has to offer, but I do believe that if NYC politicians would like to save our city, they will have to dial back their (hostile) agendas against free market and focus more on how they can compete with other states, otherwise we may lose our city for a long time to come.
I want to hear what you have to say. Add your thoughts to the comments and let’s keep this conversation going.
– For Real Estate Trends, I’m Moses Gross.
