Much Of NYC’s CRE Business Has Moved To Florida. Will It Stay?
Miami has come to be known as the sixth borough of New York City, flourishing through the pandemic as moneyed Northeasterners have made a well-publicized move south. High earners, who in any other year would be packed into subways on their way to Midtown skyscrapers, are instead filling the Miami restaurants and buying pricey Florida houses and condos as coronavirus restrictions made New York City’s winter more brutal than ever.
The migration is more than Wall Streeters. A bevy of New York City commercial real estate players, whose business stakes are firmly in the Manhattan ground, have been operating from South Florida. The weather isn’t the only draw. Miami has emerged as an easier place to work on New York deals than the Big Apple itself, industry players told Bisnow.
“It's just easier to do business right now — when you can have a meal outside, socially distanced with somebody — than it is in New York. For those of us that won't eat inside, this is a significantly more attractive place to be,” said Ackman-Ziff Real Estate Group President Simon Ziff, who has been working in Miami while his son is in high school remotely.
"I'm typically having 12 to 15 meetings a day, but they were all on Zoom. Down here, I would have 12 to 15 meetings a day, but see people three to four times.”
Ziff said he is returning to New York in the next few weeks, and he predicts warmer weather and widespread vaccines will prompt many of his industry colleagues to follow him back — but not all of them.
“Some of the younger guys, I think, are going to stay for a year or two or maybe longer,” he said. “They're testing it out for permanence."
The possibility that the migration is permanent has caused anxiety to spike for some die-hard New Yorkers, who are worried those who were already being lured to tax-friendly states have been given the final push by the pandemic.
Rumors about Goldman Sachs considering relocating one of its major divisions to Florida haven’t helped, nor have the already-announced deals of New York firms opening Florida offices, like Blackstone, which just inked a lease in Downtown Miami. Elliott Management is moving its headquarters to Florida, joining billionaire Carl Icahn’s Icahn Enterprises.
“I'm sitting in South Florida right now, and if you look outside, you would not believe Covid exists," Bentall GreenOak CEO Sonny Kalsi said during a Bisnow virtual event in January. "These markets are more open for business right now than New York.”
Witkoff Group CEO Steve Witkoff, during the same event, speaking from Miami, said he had been back to New York in the previous 10 months just four times, and the city felt “dystopian.”
Beneath it all is a fear the city could lose its edge, its ability to hold onto talent and its all-important tax dollars. As much as 80% of the city’s income tax revenue comes from the 17% of its population making north of $100K a year, per the Manhattan Institute. That means even a small migration of the über-rich is a blow for a place like New York, urban studies theorist Richard Florida wrote in Bloomberg late last year.
“This is not just a Miami-New York story, it's a San Francisco story as well,” Witkoff said. “If we don’t have proper policies on taxing and so forth, people are going to leave the city. That’s just a fact, that’s just what they’re going to do.”
The topic of Miami migration among real estate executives can be a sensitive one, considering the challenges New York City is facing right now. Office availability in Manhattan is at a record 15.5%, while residential rents plummeted by more than 15% in January.
“I’m a little tired of seeing their Instagram photos from their fancy condos and hotels,” one commercial landlord, requesting anonymity to speak candidly, told Bisnow. “They should be here in New York and setting a good example and bringing people back to the city … Fleeing during this time seems really shallow and short-sighted.”
Short-sighted, maybe, and possibly short-lived. Last year, just over 2,200 people filed a permanent address change with the U.S. Postal Service to relocate from Manhattan to Miami-Dade County, Bloomberg reported. Some 1,700 went to Palm Beach County. Those numbers account for 9% of the out-of-state moves from the borough.
But others think there could be a seismic shift afoot, and it has more to do with the political climate than the temperature.
“Anyone who wants to do business here in New York City is getting the door shut in their face by elected government officials, whereas they go to Miami and they are embraced by electeds,” said Compass Vice Chair Adelaide Polsinelli, who is getting brokers on her team in New York licensed in Florida because she estimates half her clients are now looking at assets there.
“Miami is what New York was,” she said. “We either get on and make New York competitive, or Miami will steal our lunch.”
Polsinelli said she isn’t moving, but she is definitely looking.
“Let’s see what a real year looks like in Miami,” she said. “Let’s see a couple of hurricanes and the brutally hot summers.”
In the meantime, real estate players are finding that they can do their work with a laptop and strong WiFi, said Jay Parker, the CEO of Douglas Elliman in Miami Beach.
“You can build anywhere in the world from wherever you want. You don’t have to be based in the city you are building … Unless you are the guy drilling the building or working on the product, people have proven you can work from anywhere,” he said. “Your friends are here ... Every restaurant you ever dreamed of in New York is now here.”
B6 Real Estate Advisors debt broker Steven Sperandio has been based in South Florida since early in the pandemic. He said the circumstances are presenting an opportunity to build both New York City and Miami books of business, even though the firm is still focused on the Northeast.
“There's just so many New York-based owner-operators that were safe harboring down here during the troubling situation in New York,” he said.
Green shoots of hope have given many in the business community reason for optimism in the city, however. In New York, Gov. Andrew Cuomo announced anyone over 60 years old is eligible for the vaccine, as supplies of the dose have increased. Restaurants can now serve people inside with 50% capacity, and movie theaters in the city — closed for nearly a year — this month were allowed to open to a limited number of patrons.
"I think we are at a point where people need to make their post-Covid life decisions,” said RXR Realty CEO Scott Rechler, who last year ran a campaign to encourage companies to bring their people back to the city.
He has long believed it is New Yorkers’ civic responsibility to come back to their place of business, ride the subway and support the businesses that have been pummeled by the crisis.
“This has been a year of transitions for a lot of people, but it’s time to move on and figure out if you are not coming back to New York City,” he said. “New York’s ‘new normal’ is around the corner.”
For Ziff, the post-Covid life decision is made.
“I could not be looking more forward to being in New York. I'm planning on moving from the suburbs to the city over the next year,” he said. "I love the nightlife in the city, and we become empty nesters. I would rather at least during the week be in Manhattan — even after everything that's gone on."