• Market Crumbs

As NYC Says Bye To Bankers, Technology Companies Are Moving In

Image via Anthony DELANOIX on Unsplash

New York City has been the epicenter of financial services for hundreds of years. The New York Stock Exchange, the largest in the world, can trace its roots all the way back to 1792 when War Bonds from the Revolutionary War were traded.

The trend over the last decade of financial services companies leaving New York City for cheaper destinations has been well documented. Goldman Sachs has moved thousands of employees to Salt Lake City. AllianceBernstein relocated its headquarters to Nashville. Carl Icahn is the latest billionaire to move his firm to Florida. JPMorgan Chase CEO Jamie Dimon even recently said "There are more JPMorgan Chase employees in Texas than any other state outside of New York. I’m sure it will be No. 1 soon." At the end of 2018, New York City had 4% fewer banking, insurance, securities and real estate employees than in 2008.

While financial services companies appear to be on an irreversible trend of leaving costly New York City, Silicon Valley technology companies are flocking to the city in droves. Google, Facebook, Amazon and Apple are increasingly making their mark on the city.

Last week, Amazon signed a lease for 335,000 square feet of office space in Hudson Yards. The move comes less than a year after Amazon balked at plans to open its HQ2 in the city following pushback from local politicians and activists. While the HQ2 would've brought 25,000 jobs to New York City, Amazon is set on having a footprint there as the Hudson Yards location will have more than 1,5000 employees.

Also last week, news broke that Facebook is "in talks" to lease 700,000 square feet of office space in the James A. Farley Post Office complex. The move comes less than a month after Facebook inked a 1.5 million square foot lease, also in Hudson Yards. The two leases would make Facebook one of New York City's largest tenants alongside Bank of America and JPMorgan Chase.

Apple has been searching for between 200,000 and 500,000 square feet of office space in New York City, with the potential of up to 750,000 square feet. Like Facebook and Amazon, Apple has been looking at Hudson Yards and One Madison Avenue. Apple has also been looking at the James A. Farley Post Office complex that Facebook is nearing a deal on.

Google is opening a 1.7 million square foot campus, called "Google Hudson Square," in 2020 that will allow it to double its amount of employees in New York City to 14,000. That's only part of Google's plans in the city, though, as the company also bought Chelsea Market for $2.4 billion and plans to expand at Pier 57.

It's interesting to see Silicon Valley technology companies take the opposite approach of financial services companies in regards to New York City. While they're also moving to more cost-friendly cities, their expansion to New York City appears to be driven by a search at any cost for talent. At a time when technology companies are becoming increasingly focused on profits despite employee backlash, they're heading to New York City, where Wall Street employees have been viewed as profit-driven at all costs for years.

Leftover Crumbs

  • As good as it gets? 266,000 jobs were added in November, well above the 180,000 consensus estimate, according to the U.S. Labor Department. The unemployment rate fell to 3.5%, matching a 50-year low. November's report marks 110-consecutive months of job gains in the U.S. Thanks to the conclusion of General Motors' strike, 41,300 workers returned in November, fueling the 54,000 jobs created in manufacturing last month. U.S. President Donald Trump, who doesn't watch the stock market but rather jobs, tweeted "GREAT JOBS REPORT!"

  • That's going to teach them. The Federal Aviation Administration is seeking to impose a $3.9 million fine on Boeing for failing to prevent the installation of defective parts. The FAA said "Boeing knowingly submitted aircraft for final FAA airworthiness certification after determining that the parts could not be used due to a failed strength test" on 130 737 NG airplanes. Boeing has 30 days to either pay the fine or challenge the FAA. A Boeing spokesperson said "We are working closely with our customers to take the appropriate corrective actions." The fine is pocket change for Boeing, which had $101 billion in revenues last year, including more than $10 billion in net income.

  • Elon Musk wins again. Tesla CEO Elon Musk was found not liable for defamation after calling British diver Vernon Unsworth "pedo guy." Following the verdict, Musk said "My faith in humanity is restored." Musk's legal team argued argued that "pedo guy" was not meant as a statement of fact and that the phrase is widely known as slang for "creepy old guy." This is the latest win for Musk, who got off relatively easy for his infamous "funding secured" tweet.

  • Is it enough to attract talent? Ford has announced it will allow employees to bring their dog to work in an attempt to attract workers with advanced computing skills. The company's new CFO Tim Stone is trying to recreate the perks he had at Amazon, which was named as the most dog-friendly company in the U.S. "It makes meeting dialogues different," Stone said. "When you've got a dog in the room, it just makes it easier." The pilot program, which will prohibit dogs in common areas such as cafeterias and conference rooms, will be offered to 1,300 employees.

  • They won't let the IPO die so quickly. The U.S. Securities and Exchange Commission has denied the New York Stock Exchange's proposal to allow companies to go public through a direct listing but also raise capital by selling new shares. "We remain committed to evolving the direct listing product. This sort of action is not unusual in the filing process, and we will continue to work with the SEC on this initiative," a NYSE spokesman said. Silicon Valley VCs have been pushing for direct listings to become the norm as high-profile IPOs such as Uber and Lyft have fared poorly since their debuts. However, direct listings such as Spotify and Slack have performed poorly as well since their debuts.