A recent article by Bloomberg noted that Deutsche Bank — the infamously embattled bank at the heart of the investigations into the Trump and Jeffrey Epstein organizations — was moving its Manhattan-based staff elsewhere. Bloomberg’s report suggested that this was part of the so-called “NYC exodus,” a mass outpouring of people — and companies — from the cities in favor of the presumably utopic suburbs, or in favor of an even more utopic city in a so-called “red state.”
But is there truth to this “mass flight”? Let’s take a look.
Deutsche Bank’s NYC Exodus Is Due TO The Bank Wanting To Cut Costs
In this Bloomberg report, Deutsche Bank made clear that they were looking to not only cut their costs, but cut their workforce, over the course of the next five years. Their NYC exodus was part of a greater plan to relocate their staff to smaller, less costly parts of the country in what the head of the Americas is calling “satellite offices.”
In so taking this step, Chief Executive Officer Christiana Riley says that the company will cut its costs by the equivalent of more than $300 million.
But to assess that Deutsche Bank is part of a larger NYC exodus is inaccurate — which is, perhaps, much to the dismay of those who push the narrative for their own political gain.
The German lender isn’t leaving New York City altogether — they’re just relocating their offices to Columbus Circle — and Riley makes clear that New York City will continue to be a “hub” for the bank.
“I’m optimistic that New York remains, to a degree, a hub,” she said. “You will continue to have significant amounts of institutional capital sitting in and around New York … But that isn’t maybe going to be relevant for all of those people.”
This also goes contrary to The Wall Street Journal’s recent article about how “all the empty buildings in Manhattan” are threatening its recovery. While it’s true that there are empty storefronts in Manhattan — more than what there was in the wake of the 9/11 attacks — to suggest that it’s part of a great NYC exodus is misleading, at best, and obtuse and politically motivated at worst.
The rise in the empty storefronts has nothing to do with a perceived “mass exodus” from New York City to, say, Florida — it has to do with small businesses (such as restaurants) going out of business as a result of the COVID-19 pandemic and the federal government’s utter ineptitude at keeping these businesses (and, by extension, the economy) afloat.
More than anything else, the numbers don’t bear out the myth of the great NYC exodus.
Businesses Aren’t Leaving — They’re Restructuring
According to City Observatory, not only is there no grand “NYC exodus,” but there’s also no grand urban exodus from any city.
“If we believe the “urban exodus” theory, we’d expect to see a large and sustained increase in changes-of-address in the months after the advent of the virus, compared to the same month in the previous year.
The data show nothing of the kind. While there’s a jump upward in moves in the first months of the virus—total moves up by about 21% compared to the year earlier in March and 10 percent in April, that surge didn’t persist,” they write. “The month to month variation in 2019 and 2020 is pretty similar, suggesting that the variation in movement is normal, rather than unusual).
Moreover, though, total changes-of-address declined in May and June compared to the same months in 2019—precisely the opposite of what one would expect if the Coronavirus had prompted people to migrate.”
What’s more, when it comes to “big businesses,” there’s even less of an exodus than previously believed. As banks — such as Deutsche Bank — move out of NYC to, presumably, cut their costs, other companies are moving in and taking over their vacant buildings.
And one of the biggest sectors to take over NYC is none other than the tech sector. Since the tech industry has reached critical mass in Silicon Valley, they’re looking to other big cities to take over — and NYC is at the top of the list.
Daniel Ives, managing director of equity research at Wedbush Securities, explained to NBC News that companies such as Amazon and Google are slowly taking advantage of “big banks” moving out, and making a “land grab” to move in.
“When you have stalwarts like Google [which already employees 7,000 people in New York] and potentially Amazon, it will launch a next phase of hyper-growth for tech companies in New York and the broader tri-state area,” he said. “It’s going to be a land grab.”
Patrick Moorhead, the principal analyst at Moor Insights & Strategy, reports that the “big tech” move to NYC is also political in nature. “What happens is when these big tech companies get more integrated into the fabric of local society, it is harder for government entities to lay the hammer on them.
And it’s important that these companies have a New York base. It’s a huge business hub and close enough to D.C. to get on a train and go and lobby,” he said.
All this tends to suggest that the “NYC exodus” by the big banks can also be equated to the “Silicon Valley exodus” of big tech.
And as the COVID-19 pandemic continues to reshape the way we, as Americans, do business, we can expect more companies — such as JP Morgan Chase, whose proclamation of “relocating out of New York City” seems less like a threat and more like a promise of something better — to leave. But under the right circumstances, other companies will step in and take their place.