Wall Street warms to South Florida as permanent outpost

Wall Street South is finally starting to take shape.

A year into the pandemic, Florida has emerged as the new home for a growing flock of financial firms. Paul Singer's Elliott Management Corp., Ken Griffin's Citadel Advisors LLC and Stephen Schwarzman's Blackstone Group Inc. have all made moves into South Florida within the last year. Investment banking veteran Ken Moelis has said many of his employees at Moelis & Co. have expressed an interest in working there. And Goldman Sachs Group Inc.'s asset management business has been said to be eyeing a move of hundreds of employees to Palm Beach County for several months now.

It may not be the exodus out of New York City some in the industry imagined, as there have been few indications that finance professionals en masse are ditching the Big Apple's lifestyle in favor of Florida's beaches, golf courses and early-bird dinner specials. But Wall Street's growing stake in South Florida has come to represent an evolution in how financial executives think about the way work can and should be done post-pandemic.

"Look, I'm an older guy. I'm definitely not a Silicon Valley type of CEO. I'm a blocking-and-tackling, manage-expenses kind of CEO. But you can teach some old dogs new tricks," Virtu Financial Inc. CEO Doug Cifu said in an interview.

"Ultimately, work-life balance has become, and probably always should have been, an immensely important part of what companies should be striving for. And if we can do that in a manner consistent with our ability to provide great service to our clients, as we witnessed in 2020 and the first part of 2021, then to me it's an absolute no brainer."

New York-based Virtu is setting up a more than 10,000-square-foot office in Palm Beach Gardens, Fla., where Cifu has a nearby home.

Bankers, money managers and other finance executives have long toyed with the idea of setting up outposts in Florida if they did not already have one. The Sunshine State has no individual income tax, lower commercial real estate costs than Manhattan and an overall cheaper cost of living. Proponents say its proximity to Central and South America could make it good for business, and many Wall Street executives have homes there already. Yet, questions over recruiting talent and little widespread adoption of telecommuting technology always seemed to outweigh the potential benefits.

Then, COVID-19 struck.

Portfolio managers, traders and bankers were swiftly forced to relocate to makeshift home offices on kitchen tables and in basements across the country. And though there have been plenty of bumps in the process, the work-from-home regime's success has lent newfound credibility to the idea that Wall Street does not need to be on Wall Street.

"You don't have to be in one set location to be successful anymore," said Ryan Kwiatkowski, who is head of broker/dealer sales at StoneX Group Inc and based in Winter Park, Fla. "You can function down here as if you were working from Manhattan. The dynamic has always been there. I just think the pandemic has pushed firms to take that initial step that they've always considered."

Cifu, who co-owns the Florida Panthers with Virtu Chairman Emeritus Vinnie Viola, had considered opening a Virtu South Florida outpost for years. But, in April 2020, as Cifu sat in a ghost-town office in lower Manhattan listening to guests on CNBC talk about the complications that COVID-19 would cause for commuting, a light bulb went off: Offices needed to start coming to employees, not the other way around. So, Virtu rushed to create plans for new offices in both South Florida and in Short Hills, N.J.

The Palm Beach Gardens office that Virtu is launching has room for 60 employees. Virtu was "inundated with interest" from its staff after the new office was announced, Cifu said, adding that to his surprise, much of it came from employees in their late 20s to mid-40s. And while Cifu plans to split time between South Florida and his home in New Jersey, two other top executives at Virtu are moving to work entirely from the Palm Beach Gardens office. A spokesperson for Virtu declined to name the executives.

"For the vast preponderance of our employees, it's a very appealing change of life," Cifu said. "Having, whether it's 30, 50 or 100, people sitting in an office in Palm Beach Gardens really happy in their flip flops loving life, that's a positive for Virtu."

Virtu plans to keep its headquarters in New York, though it is looking at downsizing its square footage in Manhattan, a spokesperson said. Cifu additionally expects that about 20% to 30% of Virtu's almost 1,000 employees around the world will move to a permanent work-from-home basis after the pandemic.

Not everyone in finance is convinced the rush into South Florida is real, including Adam Kahn, a managing partner at Odyssey Search Partners. The executive search firm is seeing signs of interest in the South Florida area, but Kahn says it is too early to tell whether the migration will catch on. Companies will have to convince young people to overlook transportation issues or a less vibrant nightlife in certain parts of the region, Kahn said in an interview.

"A lot of [the interest] has happened over the colder months," Kahn said. "I'm just not sure how sustainable it is."

While new headlines about financial firms eyeing a move or expansion in Florida have tapered off after a deluge earlier in 2021, the conversations have continued, according to Kelly Smallridge, president and CEO of the Business Development Board of Palm Beach County.

There have been several inquiries from financial companies across the country about opening up new offices in Palm Beach County that would bring hundreds of employees and new jobs to the area, Smallridge said. Among them are "Project Lake," a Chicago-based financial services company planning to move its headquarters to Palm Beach County in December; "Project Kraft," which plans to move to the area with a 5,000-square-foot office; and "Project Chase," a company that is planning to add a 40,000-square-foot headquarters in Palm Beach County that will employ 60 people, according to the Business Development Board. Smallridge declined to name the companies involved.

"It has not died down," Smallridge said of the interest in a March interview. "Certainly nobody's moving to a state that is more expensive than the one where they live now. The pandemic has made them realize that there are places outside of Wall Street where they can do business."