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The migration of Northeast asset managers, hedge fund managers and other financial professionals to West Palm Beach, Fla., is continuing at a steady pace, according to Kelly Smallridge, president and CEO of the Business Development Board of Palm Beach County.
Although the activity has tapered a bit from its peak several years ago, when the move by some prominent hedge funds elevated it to national news, “there isn’t a week when I don’t have a company or two contact me,” she tells Financial Advisor. The Northeast, she says, “is a very ripe region for us.”
Smallridge and her team travel there to meet with callers inquiring about relocating their financial services firms. They’re also continuing to reach out to financial leaders who already own second homes in Palm Beach County. Florida Governor Rick Scott, who once ran a Connecticut-based investment firm, is also encouraging financial services firms to move to the Sunshine State.
Big selling points for Florida are no personal income tax and lower operating expenses. “The moment that you move you save 10 percent on the cost of doing business,” Christopher Roog, director of economic development for West Palm Beach, tells Financial Advisor. The area also sports significant wealth, less congestion than Miami and two-hour flights to New York City.
Approximately 233 financial services firms are incorporated in West Palm Beach, says Roog. Many are housed in its Flagler Financial District, which is served by a new, powerful fiber-optic network. The city has $2 billion of new development in the pipeline (residential, commercial and industrial) and it’s about to invest $170 million in additional infrastructure, he says.
West Palm Beach doesn’t track exactly how much office space financial services firms lease, but Bank of America, Merrill Lynch, Wexford Capital LLC, Graham Capital Management and Affiliated Managers Group lease a combined 100,000 square feet, notes Smallridge.
Firms are “completely intrigued by how much wealth is in their backyard,” she says. Palm Beach had 25 residents make the Forbes 2016 list of world billionaires. The county’s other residential pockets of exorbitant wealth include Jupiter, Manalapan, Boca Raton and Wellington, she says.
Is West Palm Beach on its way to becoming the Wall Street of the South? “I think it’s very feasible,” she says. “You don’t need to be on Wall Street anymore” thanks to technology. But she cautions that it can be challenging to find local hires with the right skill set.
“You can’t just go across the street and pick up a trader or financial manager in 15 minutes,” she says. “It’s not like there’s a plethora of unemployed financial managers in Palm Beach County.”
“Wall Street is iconic,” says Roog, and won’t be replaced. Even so, West Palm Beach officials are discussing how to be “a global city that can be known for financial services,” he says. “Having that direct connection or that very intimate relationship with Wall Street is definitely something that I think is attainable and is the future of the city.”
March 14, 2017