There have been three of the top banks on Wall Street beginning work on new campuses in Dallas, making their bets on one of the metropolitan areas with the highest rate of population growth in one of the states with the highest rate of population growth. This year has been a significant one for the financial industry.
As a result of the tremendous rise of the business in Texas since the beginning of the pandemic, the region currently has more people working in finance than either Chicago or Los Angeles, with New York being the only state that comes in second.
It is not just the major banks that are affected. There has been a surge in wealth, and people are relocating from the coasts to Dallas in search of cheaper housing and the absence of state income tax. Asset managers of all types have been looking for ways to capitalize on this trend. In the beginning of this year, Fisher Investments moved from the state of Washington to the suburban area of Plano, following other asset managers, such as Charles Schwab and Canyon Partners, who had moved there a few years before.
“Right now, the smart money is on Dallas,” remarked Mayor Eric Johnson during the groundbreaking ceremony for the 5,000-person campus that Goldman Sachs Group Inc. will be constructing in the Victory Park area close to downtown Dallas in October.
Overshadowing competitors such as Atlanta and Miami, the city’s position as a financial center is being strengthened as a result of the emergence of new bank infrastructure. A cycle of job creation has occurred in construction, restaurants, and other areas that do not have direct ties to banking as a result of the massive migration of people and businesses to other states, including Texas.
Finance workers in Dallas, on the other hand, typically earn a significantly lower salary than their New York counterparts, even for jobs that are comparable. For instance, the annual salary of financial and investment analysts in Dallas is approximately $102,000, which is nearly thirty percent less than the average salary in New York.
For another reason, the sorts of employment that are accessible also contribute to lower average incomes. In the state of Texas, the majority of the workforce is comprised of employees working in back-office activities such as engineering, customer support, and loan processing for businesses.
In addition, there are worries that the politics of the state can slow down the expansion of the industry. In October, the office of Attorney General Ken Paxton announced that it was conducting an investigation into whether or not ten financial institutions, such as Bank of America Corporation and JPMorgan Chase & Co., could be in violation of a statute that was supported by Republicans and that punishes businesses for restricting their work with the oil and gas industry due to worries about climate change. A rule that will be enacted in 2021 would limit public contracts for businesses that “discriminate” against gun manufacturers. Officials have also conducted investigations into financial firms about this regulation.
Jamie Dimon, the Chief Executive Officer of JPMorgan, stated in an interview with Bloomberg News in November that the laws in question have the potential to undermine the state’s reputation as a business-friendly organization. Paxton has stated that the risk is exaggerated, and that the only thing that businesses need to do in order to avoid the problem is to avoid getting involved in politics.
There are currently no indications that the financial sector in Dallas will see any kind of slowdown. The new campus of Wells Fargo & Company, which will be constructed in the suburb of Irving and will cost $500 million, will have a capacity of 3,000 employees. A groundbreaking ceremony was staged by Bank of America for its thirty-story high-rise building less than a mile away from Goldman’s new site. The ceremony took place last month.
The city of Dallas-Fort Worth, which is now the fourth-largest metropolitan area in the United States, eclipsed both Chicago and Los Angeles during the epidemic to become the second most popular place for jobs in the finance industry. According to information provided by the Bureau of Labor Statistics, it is home to more than 380,000 people who are employed in those industries. These numbers are in contrast to the 323,000 that are employed in Chicago, which is the location of CME Group Inc., Cboe, and other derivatives firms that serve as the foundation of the city’s financial sector. With a total of 809,000 people working in that industry, New York continues to hold the top spot.
In addition, according to Cushman and Wakefield, the Dallas metropolitan region is home to 28 million square feet of office space, making it the second largest city in the United States behind New York. The data provided by CoStar indicates that the sector, when combined with the insurance industry, accounts for twelve percent of the total commercial real estate space in Dallas.
According to Jennifer Chandler, the market president for Bank of America in Dallas, the city of Dallas benefits from its location in the heart of the country, as well as from the fact that it utilizes two airports that provide a variety of direct travel options. According to Chandler, the corporation employs approximately 14,000 employees in the Dallas metropolitan area, with more than half of them working in engineering and operations.
Chandler remarked, “It is abundantly clear that we adore the central location.” “It’s very easy to get to and the quality of living is strong.”
Even though financial institutions such as JPMorgan, Wells Fargo, and Bank of America have been present in Texas for quite some time, the pandemic accelerated their expansion.
In 2022, Atalaya Capital Management, an alternative investment advice firm with a market capitalization of $10 billion, decided to establish its only location outside of its New York headquarters by opening an office in Dallas. The year 2021 marked the year when Charles Schwab relocated from San Francisco to the suburb of Westlake. All of Fisher Investments originated in Camas, Washington. Twenty-four billion dollars in assets, Canyon Partners, a fund based in Los Angeles, opened an office in Dallas in the year 2021. Additionally, KKR & Co. had a real estate credit office established in Dallas the previous year.
According to Ivan Zinn, the founder of Atalaya, “Covid gave everyone an appreciation for what you can do even when you are not physically present.” “With the growth of asset management, hedge funds, in Dallas in particular, you’ve seen that talent pool diffuse.”
Dallas finance executives say the region is chock full of engineering and technology workers, which is part of the reason they’ve located so many back-office operations there.
They anticipate that Texas will become home to a greater number of executive and investment banking roles over the course of the next few years. Several professionals, including Rick Wurster, a key deputy at Charles Schwab, as well as Joshua Pack and Drew McKnight, co-CEOs of Fortress Investment, have already relocated to the North Texas region. Through the addition of an investment banking section over the course of the previous couple of years, Texas Capital Bank, which is headquartered in Dallas, has been extending its business lines. In July, it introduced its first exchange-traded fund, which was specific to the state of Texas.
It has only been a few years, but JPMorgan has more than doubled the number of investment bankers based in Dallas, and the current number is fifteen.
“There are now CEOs within our business or different business units who sit in Dallas or Plano or Fort Worth running businesses with employees all around the world,” said Elaine Agather, chairman of the Dallas region for JPMorgan. “Before, so much of that was concentrated in New York.”
The information that was used in this story was provided by Catarina Saraiva, who works at Bloomberg National.
