Investment banking and financial services giant Goldman Sachs is considering withdrawing one of its major money-making divisions and relocating it to Palm Beach or Fort Lauderdale in Florida, or Dallas in Texas, Bloomberg reported, citing sources said to be familiar with the matter.
Company officials from the bank’s lucrative asset management division are said be engaged in scouting for potential office locations, speaking to local officials and calculating the potential tax advantages of making the move.
Goldman, whose portfolio included an estimated $992 billion in total assets, $1.85 trillion assets under management (AUM), and total equity of $90.8 billion in 2019, announced plans to cut costs by $1.3 billion in late January, even before the pandemic hit, with these measures said to include relocating employees to locations with a lower cost of living, presumably so they can be paid less.
The banking giant has already expanded operations in cities outside the Big Apple over the past decade in a bid to cut costs, but the new major potential Florida move would also be said to include high-profile ‘investment professionals’, and not just ‘back-office staff'. Goldman’s asset management division brings in about $8 billion in annual revenues, accounting for about one quarter of the company’s total net revenues.
In a statement to Bloomberg, the company confirmed that it was “executing” on a “strategy of locating more jobs in high-value locations throughout the US,” but refrained from providing any additional information.
Big Apple Reeling From Covid
New York City, the most populous city in the United States and a key global financial and cultural center, has been hit particularly hard by the coronavirus crisis and the associated economic downturn. Manhattan Island is estimated to have more free office space available today than at any other time since the 9/11 terror attacks in 2001.
Other financial companies have already said goodbye to the city. Elliott Management Corporation announced plans to move out of Manhattan in favour of West Palm Beach in October. A month before that, billionaire financier Carl Icahn announced that his Icahn Enterprises investment conglomerate would be making a similar move from New York to the Sunshine State.
Bill Neidhardt, press secretary to NYC Mayor Bill de Blasio, responded to the news of Goldman’s possible partial exit saying that “with all due respect to Florida, no place can compare to New York City’s concentration of talent, education, innovation and next-generation technology.”
De Blasio and New York Governor Andrew Cuomo have been criticised for some of their coronavirus-related decision-making, and accused of mishandling the pandemic in its early months. Critics have alleged that lockdowns and other restrictions have disproportionately harmed small businesses and led to a rise in crime, domestic abuse and mental health problems.
In October, CNBC reported that since March more than 246,000 New York City residents had filed a change-of-address request to zip codes outside the city, with declining incomes and a comparatively high tax burden blamed for part of the exodus. In September, the Manhattan Institute found that 44 percent of high-income New Yorkers said they had considered leaving the city in recent months because they were tired of the high cost of living.
The decline in tourism and office tower use has also caused multiple major chain retail and food businesses to shut their doors, with companies ranging from Shake Shack and Chipotle to Subway, The Gap, Victoria’s Secret closing down locations in Manhattan.