Virtu Financial Inc. is heading to Florida, adding to the wave of financial firms setting up bases outside Manhattan as the pandemic transforms how and where people work.
The electronic market maker is preparing to move about 30 people to Palm Beach Gardens from New York. It’s close to signing a 10-year lease to accommodate staff who volunteered for the transfer, and expects their ranks to swell this year to roughly 50 people, or 10% of Virtu’s U.S. workforce, Chief Executive Officer Doug Cifu said. The firm’s headquarters will remain in Manhattan.
“We are dramatically oversubscribed for people who want to relocate from the tri-state area,” Cifu said in an interview. “We surveyed our employees, and the No. 1 concern that people had was quality of life — but also taking mass transit to New York City any time in the foreseeable future.”
Virtu joins companies including Goldman Sachs Group Inc., Paul Singer’s Elliott Management Corp. and Ken Griffin’s Citadel in setting their sights on the Sunshine State. After operating with social distance for most of the pandemic year, financial firms are concluding they can cut back on ultra-pricey Manhattan office space without sacrificing revenue or productivity.
Virtu has had a record year, more than doubling net trading income to $1.82 billion through the third quarter, or $9.6 million a day.
“I was always a non-work-from-home, people-gotta-be-in-the-office, trading-room kind of guy,” said Cifu, a former law-firm partner who worked on mergers and acquisitions. “But I don’t think it’s practical given the modern world and where people want to live their lives and where people are happiest.”
Shrinking Footprint
In Manhattan, where Virtu plans to shrink its footprint by 75%, the firm will seek to sublet its current offices and look for a smaller, cheaper location. Virtu opened an office this year near Cifu’s home in Short Hills, New Jersey, with room for 150 employees. It also has a backup site in Purchase, New York, that can host dozens more, and has expanded in Austin, Texas, as well.
The changes have been driven by employees who are accustomed to remote working, want more living space and are sick of long commutes, Cifu said.
“Why am I forcing 400-odd people to schlep to lower Manhattan?” he said. “I hate it, and I’m the CEO — I don’t have a boss, I don’t have to be there on time. Can you imagine the other 399 people? They must hate it much worse than I do.”
Virtu’s Palm Beach Gardens office won’t be a satellite, Cifu said, but rather a full-fledged base for executives, salespeople, traders and technology staff who volunteered to relocate after being given the option during a company meeting last year. Those transferring will retain their current salaries, effectively giving most an 11% pay bump because Florida has no income tax, he said.
Virtu is also heading south because of a perceived shift in the business climate. New Jersey’s planned financial-transaction tax and proposals to tax high earners in New York served as warning signs that the firm needed to establish a new base elsewhere.
“Doing business in Florida is more inviting and more welcoming,” Cifu said. “There are parts of the political class in New York and New Jersey that just don’t value the jobs and the industry.”
Palm Beach Gardens is known mostly for its gated country-club communities, with retail, restaurants and a few branch offices of financial advisers mixed in. Anthony Scaramucci’s SkyBridge Capital has an outpost there, though most finance and asset-management firms tend to gravitate to the slightly more urban West Palm Beach, to the south, or to Miami, the closest major city.
Older Population
The 65-and-older community constitutes 30% of the population in Palm Beach Gardens, nearly twice the national average, a reflection of the city’s popularity among retirees. But younger families live there too, including employees of Juno Beach-based NextEra Energy Inc., and it’s become popular with celebrity athletes, including tennis stars Venus and Serena Williams.
Jupiter, one town over, has become a magnet for the world’s top golfers. Cifu, an avid golfer himself, has a house there too.
Cifu, who jointly owns the Florida Panthers ice-hockey team with Virtu co-founder Vinnie Viola, said he’s spent almost two decades driving from New Jersey to Manhattan in a Jeep that can handle potholes and scratches, spending 12 to 14 hours away from home each day — a big chunk of that time on the road. In Florida, he’s got a Corvette and will have a much shorter commute.
“I would probably leave my house at 7:30 and I would be in the office by 7:36,” he said. “On a good day, I’d probably leave at 4:30 — see the markets close. In the spring and the fall, for sure I’ll get 18 holes in.”
Even with Covid-19 vaccines already being administered in the U.S., Cifu doesn’t expect face-to-face work to return in the financial industry in a meaningful way until after 2022. When there is a broader return to offices, workers are likely to be spread across the U.S., with a lower concentration in New York, he said.
– Courtesy Bloomberg