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At first it was just one. Then another and another and another until some 20 bankers had told Ken Moelis they wanted to pack up and move to Florida. His answer: OK. “We’re a talent business,” Moelis, the chairman and chief executive officer of Moelis & Co., said in a Bloomberg “Front Row” interview. “I want to attract, I want to motivate and I want to retain the greatest talent in the world. And if that talent wants to do it in Florida, that’s where we’ll support them.” While New York will remain his firm’s headquarters, a place to collaborate, to build camaraderie and to nurture new recruits, Moelis will consider opening or expanding offices as staff relocate. He expects they’ll move to cities where tax rates are lower, the climate is warmer, and government is friendly to business.
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As spiking Covid-19 cases further derail travel, the U.S. hotel industry is closing in on a bleak marker: One billion empty rooms for the year. More than 962 million room nights have gone unsold through last week, according to lodging data firm STR. That’s about 46% more than all of last year. Based on current occupancy rates, the industry will pass 1 billion unsold rooms around Christmas, deepening a crisis for owners that may worsen before a Covid vaccine can fuel a recovery. In a normal year, vacant rooms are simply the cost of doing business in an industry that rents space by the night to travelers who sign annual leases on apartments and longer contracts for corporate offices. The occupancy rate for America’s 5.3 million hotel rooms was 66% in 2019, just short of the record high; even so, more than 650 million room nights went unsold.
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Warehouses are the hottest corner of commercial real estate—maybe too hot. Investors have poured money into industrial properties in 2020, spending more on U.S. warehouses than office buildings for the first time as social-distancing pushes even more consumers to e-commerce. Warehouses are seen as more resilient in the coronavirus economy, particularly as hotels and retail properties are walloped by the pandemic and offices face pressure from remote work. The world’s biggest private money managers Blackstone Group Inc., Cerberus Capital Management and KKR & Co.—are all buying logistics centers. The surge of investment is driving up prices, with industrial properties jumping 8.5% in the 12 months through October while retail real estate values fell 5.2% and offices were little changed, Real Capital Analytics Inc. reported.
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Goldman Sachs Group is considering moving its asset management division to South Florida, potentially joining other financial giants who have left New York for the Miami area. The investment bank has looked at spaces in Palm Beach County and Fort Lauderdale, Bloomberg reported. Goldman Sachs is looking to take advantage of tax benefits if it opens a home base in Florida. Florida, which lacks a state income tax, has increasingly attracted wealthy executives throughout the pandemic. Goldman Sachs’ asset management arm brings in about $8 billion a year, accounting for about a quarter of its revenue, according to Bloomberg. Investment professionals and back-office staff would eventually work out of the Florida office.