A new Bloomberg report finds that relocations of investment firms have moved $1 trillion in AUM out of New York and California since 2019, with the majority moving to Sun Belt states motivated primarily by a desire for lower taxes, lower cost of living, and warmer weather.

• New York lost the headquarters of 158 investment firms, while Florida was the largest recipient with 104 headquarters and 56 coming from New York. Additionally, the creation or expansion of secondary offices outside of higher-cost cities presents a longer-term risk of continued outflows of high-income workers.

• The economic impact on New York to-date appears less severe than anticipated, with employment in financial services recovering to pre-pandemic levels and tax revenues generally remaining strong through the pandemic.

• Yet, challenges remain if growth in Sun Belt hubs continues to outpace that of New York and similar regions, particularly as uncertain demand for office real estate poses looming economic and fiscal risks.