Miami faces a host of opportunities and challenges in the years ahead, from building out its infrastructure for a growing population to protecting its people, places and things from the growing threat that climate change poses to a state surrounded by water.
Growth pressures in Miami and in Southern Florida create an opportunity for municipal bonds, if they can be sold to tax- skeptical locals as a way to fund and finance growth and sustainability as new arrivals bring their expectations about education, transportation, housing and infrastructure with them.
“Florida continues to benefit from outmigration from a number of states, but particularly those from the Northeast. Those moving to Florida tend to bring with them higher incomes, which will benefit Florida going forward,” Ian Rogow, co-head of municipals research at BofA Securities, told The Bond Buyer.
BofA said the net loss of people and their income is a credit negative for California and New York, particularly if these migration trends continue post-pandemic.
“Florida has also benefitted from the new work-from-home environment brought on by COVID,” Rogow said. “As workers are no longer tethered to high cost, high tax areas in the Northeast, many have sought out lower cost, lower tax states, like Florida.”
Florida doesn't levy an income tax, which for a long time has been as much a lure for retirees as the warm winter weather.
The mobile phone surveillance firm Unacast noted there were 59,000 visits by New Yorkers to Southeast Florida in 2020 that lasted over eight weeks, with most New Yorkers visiting Palm Beach, Miami-Dade and Broward Counties.
New residents who sell Northeast homes can bring assets higher than those of existing South Florida residents, along with higher incomes if they can take their jobs with them.
Unlike the net outflows of people from New York City where residents who leave are replaced with lower income workers, the opposite is occurring in Southeast Florida counties.
BofA said this is a credit positive for Florida and noted that New Yorkers moving to Palm Beach have incomes that are about 30% higher than the average worker in the county.
“Additionally, the state’s more open policy during the COVID pandemic has arguably reduced the economic impact on the state,” Rogow said. “The U.S. Bureau of Economic Analysis data shows a 2.9% GDP decline for Florida, with similar figures in neighboring states, relative to larger economic impacts in the Northeast.”
Another gauge of economic recovery, the Back-to-Normal Index from CNN and Moody's Analytics shows that the Southeast’s economies are nearly 90% of historical levels.
For the United States, the BNI was 86.0% as of March 16. Florida's economy is one of the closest to being fully normal with index values of 95.7% while New York's index value of 74.9% is lowest among the 50 states.
Regionally, the BNI shows the Southwest's economy is closest to pre-pandemic levels, with a weighted average index value of 91.5% and is closely flowed by the Southeast at 90.5%.
Pragmatism also plays a part as to when and where people move, since economic well-being is key.
People look at job opportunities, safety, housing and education before they move while businesses look at the bottom line.
“When other cities raise taxes, we cut them. When other cities penalized new industries, we welcomed them. When other cities defunded their police, we invested in them,” Miami Mayor Francis Suarez has said.
There is no doubt the COVID-19 pandemic hit the Sunshine State hard, starting with more than 33,000 dead, and its repercussions are still being felt.
According to a survey done by
"Towards the beginning of the pandemic, a WalletHub study found Florida's economy to be the most exposed to the coronavirus. This was because the industries that have been highly affected are also some of those that contribute the most to the state's GDP,” WalletHub analyst Jill Gonzalez told The Bond Buyer. “These industries include accommodation, food services, arts, entertainment, recreation, retail trade and real estate. Despite these circumstances, Florida has managed to rank in the middle of the pack in terms of unemployment rate recovery."
At a more granular level however, Miami's economy is recovering only slowly, according to WalletHub.
“Miami is among the cities in the most financial distress during the pandemic. Its unemployment rate is recovering very slowly, as is the case with other cities in its area, such as Fort Lauderdale and Hialeah,” Gonzalez said. “At the end of 2020, the unemployment rate in these cities was 7.7%, which is above the state level. Other cities in Florida that fare better in terms of unemployment rate recovery include Cape Coral, Port St. Lucie, Jacksonville and Tallahassee."
In the U.S. as a whole the jobless rate stands at 6.2%, down from April 2020’s near-record high of 14.7%.
According to one recent report, the narratives about widescale cross-country moves have been overstated because the residential upheaval caused by the pandemic is more localized.
“New York County [Manhattan] residents who packed up and moved mostly stayed in the New York City metro area,” the report said. “Half of the top 20 destinations for migrating New Yorkers were in other counties in New York State, four were in New Jersey and two were in Connecticut.”
“The clear takeaway is that even large municipalities with higher than average out-of-state migration rates were losing a large percentage of their residents to nearby in-state and adjacent out-of-state counties. So while cities may be losing residents in the short term, they aren’t necessarily losing their center of gravity,” the report said.
Still this doesn’t mean that Southern states will be left out in the cold.
“Warmer climate states and sparsely populated regions saw net population increases that could significantly boost those areas,” the Placer.ai report said. “Should these states prove capable of retaining these new populations, retail and office real estate opportunities could quickly follow. This is especially true when considering that many of those migrating from expensive cities are likely to have greater means at their disposal moving forward. Expect employers, retailers, and real estate professionals to put a greater focus on these rising areas as they represent powerful long-term opportunities.”
And this is already happening.
According to the Business Development Board of Palm Beach County, Florida, the county 70 miles north of Miami has recently seen the relocation of 10 financial industry companies that plan to create thousands of jobs.
“Financial firms have flocked from the Northeast U.S. to open offices in the Palm Beaches. In 2020, 70,000 wealthy people chose to abandon New York City, taking $36 billion with them,” the board said in a press release.
According to the board, some of the firms that are coming down from the Northeast include Goldman Sachs Group, NewDay USA, Virtu Financial, Elliot Management, Colony Capital, Point72 Asset Management and Wealthspire Advisors.
Palm Beach County currently hosts over 2,500 financial services firms which employ over 33,000 people with an average salary of about $80,000 a year, the board said. It gets most of its relocations from New York City, Boston, Chicago and Greenwich, Conn.
“From Cuba to California, from Nicaragua to New York, Miami is more than a city. It is an idea, a dream and an opportunity for those feeling oppression” Suarez says. “Over the past year we have welcomed the future unashamed, unafraid and optimistic. Miami has moved in a new direction and that is forward."
