Report: Northeast and West Coast Lose Investment Firms that Manage Trillions

Investment companies are reportedly moving to states with a lower cost of living.

More than 370 U.S. firms — equal to about 2.5% of the country’s total — moved their headquarters to a new state between the beginning of 2020 and the end of March, and the “vast majority” moved from the Northeast or the West Coast to the Sun Belt, Bloomberg reported Monday (Aug. 21).

Those moves have included thousands of jobs and close to $1 trillion in assets under management, according to the report.

The report attributed the trends to investment firms seeking lower taxes, less expensive property and warmer weather. In some cases, individuals moved to states with warmer weather during the pandemic and then didn’t want to move back.

Still, New York remains the top location for firms in the investment industry, with its assets under management totaling more than 10 times that of Florida, per the report.

For the states losing these companies, these moves mean a loss of jobs, commercial tenants and tax revenue at a time when the real estate market is already under pressure due to remote and hybrid work, the report said.

It was reported in June that commercial real estate is one of the problems facing the banking industry, as the work-from-home movement has slashed office values. Along with that, nearly $1.5 trillion of commercial property debt is due to be repaid before the end of 2025, and increased interest rates have reduced the value of many properties.

A July report found that the amount of office space in the U.S. has declined for what is likely the first time in history. Three times more square feet of office space was removed from the market than was added by new offices breaking ground.

That trend has been attributed to more people working from home, rising borrowing costs, increasing numbers of delinquencies and falling prices for properties.

PYMNTS research has found that consumers earning over $100,000 per year were much more likely to exhibit more engagement with work outside traditional office settings, likely because white-collar or other types of office work can be done from home.