Low Tax Rates and Mild Florida... Companies Also Join the 'New York Exodus'

[Asia Economy Reporter Haeyoung Kwon] Tech, finance, and legal companies based in major cities such as New York, USA, are relocating to the state of Florida in search of lower taxes and milder weather. As the 'Manhattan exodus' unfolds, with not only the middle class tired of the high cost of living in big cities but also companies and the wealthy leaving urban centers, Florida is becoming a land of opportunity in the real estate development industry.

Steven Ross, founder of Related Companies and a titan in the US real estate development industry, recently stated in an interview with Bloomberg News that he expects wealth in the US to move from the Northeast, including New York, and is expanding his business to southern Florida. Steven Ross is the developer of 'Hudson Yards,' a mixed-use complex of office buildings, residential·commercial facilities, and hotels built atop the Manhattan rail yard.

He emphasized, "People leaving the Northeast (New York) are looking for jobs, and companies are looking for offices," adding, "(Florida offers) tax benefits, security issues, and comfort of life."

Unlike major cities such as New York and California, Florida has low tax rates, and its income tax rate is even 'zero (0).' In fact, the effective tax rates of the top five US states with the highest population outflow last year ranged from 11.5% to 15.9%, whereas the five states with the highest population inflow, including Florida, had effective tax rates between 7.6% and 9.9%, roughly half.

Accordingly, over the past two years, many tech, finance, and legal companies have left major cities to relocate their headquarters or expand offices in Florida. The large US hedge fund Citadel moved its headquarters from Chicago to Miami last year. Apollo Global Management and Blackstone expanded their offices in Miami. This trend is also reflected in population inflow and outflow. Last year, New York lost 299,557 people, reducing its population by 0.9%, while Florida gained 318,855 people, increasing its population by 1.9%.

Related Companies is promoting a mixed-use project called 'The Square' near Palm Beach, Florida. The Square has attracted companies such as Goldman Sachs Group and Point72. Point72 is an early-stage startup investment firm founded by billionaire hedge fund manager Steven Cohen. Meanwhile, major cities like New York and San Francisco are reportedly struggling with vacancies, according to Bloomberg.

Ross explained, "New York will continue to grow but will face challenges," adding, "Many people who do not need to be in New York simply do not go there."