Wall Street’s Shift to Dallas Amidst Political Changes

With Zoran Mamdani potentially stepping into the role of mayor, there are whispers about how this might affect Wall Street. In the meantime, Dallas continues to thrive as a business hotspot, luring in big names like Ross Perot, Mark Cuban, and Jerry Jones. Recently, it has attracted major financial firms that have their roots in New York.

Goldman Sachs is making a significant investment by building an 800,000-square-foot campus in Dallas, with a budget of $500 million, slated to open in 2028 and host over 5,000 employees. Notably, they recently brought in former Dallas Fed president Robert Kaplan as their vice chairman.

In contrast, JPMorgan Chase reports having 31,000 staff in Texas, significantly more than the 24,000 based in New York, and this is after just launching a new $3 billion headquarters on Park Avenue, designed by well-known British architect Norman Foster.

“It wasn’t supposed to be like this, but Texas really appreciates having you there,” CEO Jamie Dimon remarked to Bloomberg in 2023.

As the upcoming elections approach, Wall Street seems less favored in New York. Voters are poised to elect a candidate who has long advocated for police funding cuts and proposes tax increases for the wealthy.

Drew McKnight, co-CEO of Fortress Investment Group, expressed his thoughts in an exclusive interview, noting that local government is actively working to eliminate bureaucratic hurdles to make the city more appealing for businesses.

“New York still holds its ground as the financial capital of the U.S. and one of the world’s financial leaders…but Texas is certainly in the race,” the former Goldman Sachs employee shared from their Dallas headquarters, which spans 50,000 square feet.

McKnight also mentioned concerns about how Mamdani’s influence could disrupt the city’s real estate landscape, particularly with proposals for rent control.

Although Fortress is still headquartered in New York, it has seen rapid growth in Texas since 2021. Other big Wall Street firms are also relocating or expanding in the area. Dallas currently boasts around 384,000 employees in the financial sector, making it the second-largest national hub following New York.

Looking ahead to 2024, projections indicate Texas will have 519,000 financial workers, surpassing the 507,000 found across New York state. This is bolstered by Texas’s constitutional ban on financial transaction taxes and specialized business courts, making it an attractive option for capital migration from traditional coastal centers.

McKnight pointed out that conducting business in Texas is becoming significantly easier—it’s not solely about tax advantages, but also the quick permitting processes and faster decision-making involved.

He highlighted the example of MP Materials, a company backed by Fortress, which set up a magnet manufacturing plant in Fort Worth that went from ground-breaking to operational in just over a year and a half. “That timeline would be really hard to imagine anywhere else,” he said.

McKnight reflected on trends he’s noticed, saying he hasn’t seen anyone move to Dallas and then return. “I’ve heard of people moving from New York to Miami, but they often come back; that’s not the case with Dallas,” he said.

Dallas presents notable lifestyle benefits too. The average commute is around 27 minutes, and its central location allows for swift access to both coasts within just three hours by plane.

As far as culture and lifestyle go—areas where many executives argue New York excels—McKnight believes Dallas is holding its own. “The restaurant scene is fantastic,” he remarked, mentioning favorite spots like Carbone. “Access to sports and live music is just incredible.”

His advice for young bankers contemplating a move is straightforward: “I don’t feel like I’m giving up anything by being in Dallas instead of New York. From a business angle, it’s just easier, and from a lifestyle point of view, it’s better.”

Looking ahead, McKnight perceives the trends in Texas as part of a gradual evolution rather than a sudden departure from New York. “If we aren’t maintaining a strong foothold in New York, it’s clear we’ll have to adapt significantly,” he noted. “But Dallas isn’t merely catching up; it’s really in the running.”