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Ken Griffin Makes Wall Street South in Miami a Reality

MIAMI, FLORIDA - OCTOBER 27: Aerial view of palm trees framing the city skyline on October 27, 2021 in Miami, Florida. Some cities in Florida are encouraging the planting of canopy trees, including species such as gumbo limbo, oak, ash, elm, and sycamore, in place of palms. Palm trees do not sequester carbon at the same rate as native canopy trees to help with climate change. A tree absorbs carbon during photosynthesis and stores it for the tree’s life, but Florida’s palm trees are the least effective at carbon sequestration. (Photo by Joe Raedle/Getty Images)
MIAMI, FLORIDA - OCTOBER 27: Aerial view of palm trees framing the city skyline on October 27, 2021 in Miami, Florida. Some cities in Florida are encouraging the planting of canopy trees, including species such as gumbo limbo, oak, ash, elm, and sycamore, in place of palms. Palm trees do not sequester carbon at the same rate as native canopy trees to help with climate change. A tree absorbs carbon during photosynthesis and stores it for the tree’s life, but Florida’s palm trees are the least effective at carbon sequestration. (Photo by Joe Raedle/Getty Images) (Photographer: Joe Raedle/Getty Images North America)

Ken Griffin is turning Wall Street South into a reality. After years of speculation, the billionaire supporter of Governor Ron DeSantis of Florida is moving his hedge fund and market-making businesses to Miami from Chicago, cementing the area’s status as an attractive destination for finance and investment jobs.

The arrival of Griffin’s firms, Citadel and Citadel Securities, marks an exciting development for a region that has struggled to establish an economic identity outside of trade and the low-paying tourism industry. For years, it has been a place where the wealthy spent leisure time and acquired real estate but not where most of them earned their living. That drove many of the brightest young Miami minds elsewhere. 

Now, it’s both, but the shift comes at a delicate moment for one of the least affordable and most-unequal cities in America, and local officials must ensure that the boom in hedge funds doesn’t come at the expense of the city’s affordability for ordinary residents.

Inflation is already uniquely painful in the Sunshine State. Single-family rents in the Miami metro area surged 41% in the past year, the most among large metro areas tracked by CoreLogic, thanks in part to limited supply and the added demand from people moving into the area. On Zillow, typical rents in the Miami metro are now comparable to those in Los Angeles despite household income levels that are about 25% lower. Meanwhile, Miami’s Gini coefficient — a measure of inequality — is on par with Colombia’s.

Officials including Miami-Dade County Mayor Daniella Levine Cava, a Democrat, and City of Miami Mayor Francis Suarez, a Republican in a nonpartisan office, must ensure that the city builds more affordable housing so working-class residents can stay close to the urban core and aren’t forced into vulnerable neighborhoods and dwellings that can’t handle the area’s brewing climate-change challenges. They should also redouble efforts to improve the county’s woeful public transportation system, which has been plagued by decades of delays and broken promises. If officials fail at these tasks, Miami could cease to be viable for the working-class people who made it what it is, including the many immigrants from Latin America who give South Florida a character unlike any other in the US.

Of course, you can’t blame people for wanting to move to a place with year-round warm weather, rich culture and no state income taxes. In addition to Citadel, splashy recent arrivals have included Cathie Wood’s Ark Investment Management in St. Petersburg; Elliott Management Corp. in West Palm Beach; and Jeffrey Gundlach’s DoubleLine Capital LP in Tampa. 

The work-from-anywhere revolution allowed individuals and companies to make lifestyle choices they couldn’t before, and asset-light hedge funds (which often consist of a half dozen people working on computers) were naturally among the first movers. Griffin is also Governor DeSantis’s top donor, and he has made no secret of his disdain for the crime and political leadership in Illinois, the state Citadel leaves behind. 

To be sure, South Florida has plenty of troubled cities itself, and it still has a long way to go before it can be viewed as a full-fledged alternative to great finance cities including New York. Although it’s easy for white-collar workers and hedge fund bosses to work from anywhere, other factors are still tying people to traditional hubs in the Northeast. One common refrain among the 1% is that there aren’t enough slots at top Ivy League “feeder” private schools. The market will adapt to meet that demand, but that will take time. As of the most recent Securities and Exchange Commission data, Florida had just 1.8% of the US’s regulatory assets under management, up from 1.3% before the pandemic. 

Still, it’s evident that the official numbers undercount the industry’s growing size, in part because they don’t include the countless satellite offices. It’s also undeniable that large and influential firms like Citadel will help build further momentum. That means Miami — a lifestyle city par excellence — finally has a shot at retaining its home-grown talent and reversing the brain-drain of the past. But in the process, it must protect the working-class people who made South Florida what it is.

More From Other Writers at Bloomberg Opinion:

• Make Sun Belt Cities More Like New York and L.A.: Conor Sen

• Remote Working Offers Growth Engine for College Towns: Conor Sen

• Are Workers More Productive at Home?: Justin Fox

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Jonathan Levin has worked as a Bloomberg journalist in Latin America and the U.S., covering finance, markets and M&A. Most recently, he has served as the company’s Miami bureau chief. He is a CFA charterholder.

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