Tuesday, July 28th, 2020 July28th2020

Sell for More News: The mass exodus from New York has begun

Published on July 28th, 2020

Sell for More News is a weekly blog series with interesting information from the world of commercial real estate.


I’ve been saying for years to expect people and companies to relocate from high tax, bad weather states in mass.  (And one high tax, good weather state is also on that list…here’s looking at you California)

As a commercial real estate investor, how can you profit from this information? Sell out of states that have an exodus…buy into states that are growing.

A good example is the mega-trend of New Yorkers moving to Florida. Why?  It’s simple…money. You can save more money living and working in Florida.

And post-pandemic we’ll likely see an acceleration in the trend to the Sunbelt states.

The work-from-home trend will only dump gasoline on the fire.

Tax “Cuts” 

“Escape from New York” was accelerated by the Republican tax cuts.  The elimination of the state and local tax deductions did the city in. Even Governor Andrew Cuomo admitted as much.

Prior to the tax cuts the New York metropolitan area was losing 100 people per day on average, most of it to Florida.  Now it’s closer to 270 per day.

The reduction of the state and local tax deduction doubled the percentage rate of taxation for those living in the city.  The deduction is now limited to $10,000 for state and local taxes.

State and local income taxes in New York are about 13% for high earners. People used to be able to deduct it from their federal income taxes, bringing it down to around 6.5%. That’s gone.

A high-profile example

Two years ago, Barry Sternlicht’s Starwood Capital Group started poking around Miami for office space. He already had a house there, but clearly he wanted to leave the expensive Tri-State area. He didn’t want anyone in government to know that he was considering bailing on Greenwich, Connecticut because — supposedly — he didn’t want to feel pressured by politicians to stay. So when he found a place, the idea was that he would announce his move and it would be final, people close to the deal said. He found a place and his company is now headquartered there. He’s a Floridian now.

What most people don’t realize is business owners plan their exits in secret.  It does not benefit them to draw attention to their move.

A great example of this is happening in the Chicago area now.  I personally know countless high earners and business owners who are secretly plotting to sell off their Illinois assets and get out while they still can.

Not just high-earners

All social classes are moving to Florida, while the rich prefer places like Miami and Naples…not just the high end earners moving.

The lower to middle class income earners are also leaving New York, and the costly northeast in general.
Alexandria Ocasio Cortez’s mother left New York a couple of years ago, citing the high cost of living and taxes.

Cuomo has been very open in saying that people leaving the state is like having a major heart attack. High income earners leaving is one thing. But entire companies leaving does serious damage to New York’s tax base, a base it needs in order to fund essential workers and services, let alone city pension plans.


There are two things New York state and city will be forced to do: raise taxes and cut services.

Mayor Bill DeBlasio is already toying with charging more for people using Lyft and Uber in Manhattan.

With the protests of late, New York’s midtown looked a bit like south Florida right before a hurricane. Stores were boarded up to protect from property damage.

“I was watching CNBC the day the NYSE started trading on the floor again a couple weeks back,” said a New Yorker. “If you went to work at the Exchange, you couldn’t go inside if you came in by the subway. So no one who worked there got there by train. Unless you are living downtown, in those expensive apartments, you couldn’t work,” he says. “And you’re paying $5,000 a month to live near the Exchange. You can buy a house for that, keep most of the money, and have a totally different quality of life. It’s not a mass exodus, but I am pretty sure it’s a trend that’s not going away.”

It’s not going away…this trend has only just begun.  In the next 10 years I expect to see investing strategies that explicitly target low tax, good weather states…which is to say…target those states with growth.


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About Beau Beach, MBA CCIM

Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.

Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee and South Florida markets.

He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.

Beau can be reached at 800-721-3287, click to schedule a call or Beau@soldbybeachwood.com