Financial Centers: Critical Mass is Key
With so many new financial centers emerging in secondary cities around the U.S., where will your new location be?
When you say the words “financial center,” most people immediately think of New York City, San Francisco and Chicago. And certainly these cities have a high level of financial development with a large degree of high finance firms and jobs in the areas of investment banking, corporate finance, and securities trading. High finance involves large capital transactions on behalf of firms or government entities so there’s a lot of logic to the fact that these three large centralized cities are the most well known financial centers in the United States.
However, the question asked in October of 2007 by The New York Times is, are New York’s days as the world’s epicenter of finance coming to an end? The article, written by Daniel Gross, points out that “in today’s burgeoning and increasingly integrated global financial markets-a vast, neural spaghetti of wires, Web sites, and trading platforms-the New York Stock Exchange is clearly no longer the epicenter. Nor is New York. The largest mural fund complexes are in Valley Forge, PA, Los Angeles and Boston, while trading and money management are spreading globally.”
New York’s status as a financial epicenter is certainly not over yet, but we are seeing other cities around the U.S. start to grow as financial centers in their own right. According to Dennis Donovan, principal/owner of location consulting firm WDGC Consulting LLC, the key factor in choosing a new location for financial services firms is a critical mass of occupational employment of people who are Series 6 and Series 7 Securities Exchange Commission (SEC) licensed.
“We do at least ten searches a year in the area of financial services,” says Donovan, a location consultant for more than 30 years. “They are very much driven by labor availability.”
So universities and business schools that put an emphasis on finance courses are a must, as are locations that have a number of securities law firms, accounting firms and other services the help financial centers thrive. Although information can be gathered on the Internet from any location, financial services require a large amount of face time to complete transactions. And as with any location choice, when finding a location for your financial services corporation, the best economic development incentives are always a factor. Here are some locations that are rolling out the red carpet to attract financial services firms.
Overland Park, KS: Midwest Business Leader
Overland Park, KS, located in Johnson County, has been a premier corporate location in the Midwest for nearly 40 years. This suburban community on the southwest quadrant of Kansas City has seen its population more than double since 1980 to 173,225 in 2008.
Within the financial services industry, corporate giants like Wells Fargo, AIG, ADM, MetLife and Chrysler all have operations Overland Park.
The community’s centralized location, breadth of commercial office space, low-cost of living despite high-quality residential developments, and smart and skilled workforce all combine to create a community perfect for financial services firms. As a result, the financial services industry has become a major factor in the growth of Overland Park. This growth has been strengthened by recent relocations and expansions. In 2005, Capital One Financial Corp. purchased the locally based eSmartLoan.com. Initially, several states were considered for the newly created division called Capital One Home Loans that would eventually employ 900.
Another financial services firm, Ace Mortgage Funding, the ninth-largest mortgage broker in the country, opened a regional processing center in 2007. Ace Mortgage Funding found affordable space in one of Overland Park’s Class A office properties. Overland Park has more than 21 million square feet of office space with average rental rates ranging from $18 to $20 per square foot.
Within the financial services industry, securities and investments are related segments that have continued to grow with the presence of Waddell & Reed Financial, Inc. and more recently with The Mutual Fund Store. The Mutual Fund Store, one of the nation’s largest and fastest growing independent, fee-based advisory firms, chose to expand its headquarters in the community last year by leasing more than 22,000 square feet of space.
The recent opening of a new regional office for SolomonEdwardsGroup, a national CFO services firm, might provide the best evidence of the area’s financial services talent because it is one of the company’s core competencies. The overall number of of underwriters and financial analysts located in Overland Park is 120% and 43% greater than the average In the United States for these employment classifications, respectively.
Overland Park is served by three school districts that are consistently ranked in the top 8% nationally.
Jersey City, NJ: Renaissance of Wall Street West
Welcoming visitors, new residents and businesses, Jersey City is New Jersey’s fastest growing city and one of its most diverse. With many amenities and resources, Jersey City is the perfect place to live, work, and do business. And the Jersey City Economic Development Corporation (JCEDC) is a driving force behind the success that the city has achieved and continually gains. In addition, Jersey City features a thriving business community, welcoming neighborhoods, many cultural and artistic venues, numerous recreational opportunities, fine dining establishments representing a variety of cuisines, and more.
A city in the midst of a renaissance, Jersey City is experiencing growth on many fronts, and particularly with the influx of various financial and commercial institutions that are now calling Jersey City’s downtown business center their home. Currently, there are dozens of Fortune 500 corporations and other international firms, plus many financial offices are located in Jersey City, which is often referred to as “Wall Street West.”
In Jersey City, there is no city income tax, corporate tax, payroll tax, or commercial rent tax. Compared to Manhattan, utility rates are 30% lower, operating costs are 35% less, and the average advertised rent for Class A office space is one-third more economical. Jersey City’s tax programs are designed to let you keep the money you’ve earned.
Jersey City is part of the Tri-State Area business corridor and offers top-tier infrastructure and resources. This includes people and technology from telecommunications providers, manufacturing and industry, universities and state-of-the-art medical facilities-all of which are essential resources available to help your business start, grow, and flourish.
The state’s Business Employment Incentive Program (BEIP), Business Relocation Assistance Grant (BRAG), Employee Training Grant (ETG), Urban Enterprise Zone (UEZ), and local pro-business policies make a Jersey City address even more desirable. In just the last six years alone, Jersey City gained 35,000 new jobs and $3.8 billion in capital improvements. An additional $52 million nurtured the inner city through 60 UEZ programs.
Jersey City offers attractive incentives for businesses large and small, including low operating costs, reduced taxes, and convenient public transportation options. Furthermore, the UEZ Program in Jersey City has 592 participating businesses, which can offer certain goods and services with a sales tax of 3.5%-half of the standard New Jersey sales tax rate. Businesses can take advantage of employee tax credits and some reduced unemployment insurance costs and may be exempt from taxes on certain goods and services.
For more information, please contact: Jersey City Economic Development Corporation at 30 Montgomery Street, Suite 820 Jersey City, NJ 07302 Phone: 201-333-7797 Fax: 201-333-9323 Web: www.jcedc.org.