Denver and other inland locations draw financial firms and jobs
fleeing costly coastal cities
By Asjylyn Loder | Photographs by Michael Bucher
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 27, 2017).
Wedged into a rent-controlled two-bedroom apartment near San
Francisco's famed Haight-Ashbury neighborhood and already overrun
by their son's toys, Kari Droller and her husband weighed having a
second child against the skyrocketing costs of a larger home
nearby.
Instead, Ms. Droller, managing director of Charles Schwab Inc.'s
ETF platform, put in for a transfer to Denver, joining a tide of
financial professionals who are forsaking high-cost coastal meccas
for America's inland cities.
Traditional finance hubs have yet to recover all the jobs lost
during the recession, but the industry is booming in places like
Phoenix, Salt Lake City and Dallas. The migration has accelerated
as investment firms face declining profitability and soaring real
estate costs.
The market's shift to low-cost passive investing compounds those
difficulties, pushing firms to look for new ways to cut costs.
Charles Schwab is emblematic. Since announcing its relocation
strategy in early 2013, the company has shrunk its San Francisco
headquarters to fewer than 1,300 people, a 45% decrease. Its
47-acre campus south of Denver is now Schwab's largest office,
employing almost 4,000 people. An expanded office in Austin, Texas,
will be completed next year, and construction is under way on a new
location near Dallas.
"San Francisco is a wonderful place, but unfortunately it's an
expensive place from a real estate standpoint," said Brian
McDonald, a senior vice president for Schwab. "So we had to
identify other places where we could make things work."
While the finance industry has been relocating entry-level jobs
since the late 1980s, today's moves are claiming higher-paid jobs
in human resources, compliance and asset management, chipping away
at New York City's middle class, said Kathryn Wylde, president and
chief executive of the Partnership for New York City, a nonprofit
that represents the city's business leadership.
"This industry isn't just a bunch of rich Wall Street guys," Ms.
Wylde said. "It's a big source of employment that's disappearing
from New York."
Mass relocations can be messy. Some people don't want to leave
big cities despite the costs. Not all employees are invited to make
the move, Ms Wylde said. Those who stay behind are often left
without a job. For a number of employees, remaining near family
outweighs the cost savings of moving to another city, and companies
often lose good employees through the process.
When Partners Group AG announced last year that it would
relocate its San Francisco operations to Denver, 60% of its 34 San
Francisco employees declined to make the move and had to find jobs
elsewhere, according to spokeswoman Jenny Blinch.
Still, the trend shows few signs of slowing. Denver's investing
sector is growing at twice the national average, bolstered by the
expansion of the exchange-traded fund industry. Janus Henderson
Group PLC, which owns VelocityShares ETFs, is based in the tony
Cherry Creek neighborhood, while ALPS, one of the largest ETF
distributors in the U.S., is based near the city's art museum.
When industry group Women in ETFs opened a new chapter in
Denver, the goal was 50 members in the first year, said Heather
Grubbs, a vice president of marketing for Fidelity. At the
inaugural meeting in January, 135 people signed up.
The Denver region is competing for 12 new finance projects
representing 4,000 potential jobs, including a lending firm from
San Francisco and a potential 1,200-job expansion by a New
York-based firm, said Janet Fritz, spokeswoman for the Metro Denver
Economic Development Corp.
On the banks of the South Platte River, not far from where
Denver got its start as a gold rush town, financial-services giant
TIAA is renovating its 1,500-person office. After completing a new
call center in 2013, Fidelity Investments has expanded its staff
near Denver to 800 people. Accounting and advisory firm
PricewaterhouseCoopers plans to expand its local staff. Partners
Group expanded its temporary offices as its Denver workforce grew
to 80 people, including workers who requested relocation from its
offices in New York, Houston and overseas.
For Will Rockett, a Manhattan native who moved to Denver seven
months ago for Schwab, it is the first time he has ever lived in a
house with a yard. Erica Escalante, who left New York five years
ago and works for Janus Henderson, says she nearly wept when she
realized she would have a washer and dryer in her own apartment.
Jessica Zofnass Barclay has met more than a dozen other "recovering
coastals" since moving to Denver in 2013.
The population boom has had some unwelcome side effects. With
more than 1,000 people moving to Denver every month, traffic jams
routinely clog area highways and the housing market has become one
of the most fast-moving in the country. Even with prices at record
highs, homes sit on the market for just 7 days before finding a
buyer, according to Redfin, a Seattle-based residential real-estate
brokerage.
And while Denver home prices reached a record in June, they are
still far below San Francisco.
"If you're talking to someone who's been in Denver, they'll say
it's getting unaffordable, but if you're coming from San Francisco,
the reverse sticker-shock is wonderful," said Ms. Droller.
She and her husband bought a four-bedroom house in the city's
Platt Park neighborhood for $680,000. Friends back in San Francisco
paid almost twice that for a two-bedroom apartment. Their oldest
son has a yard to play in, and their second child, a boy, was born
in June.
She has already heard from three colleagues in Schwab's San
Francisco office about moving to Denver.
--Paul Overberg contributed to this article.
Write to Asjylyn Loder at asjylyn.loder@wsj.com
(END) Dow Jones Newswires
July 27, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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