Millennials aren't the only ones relocating to Denver
Financial Workers are Finding New Homes for their Families and Companies in Colorado
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 SchwabInc.’s 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 GroupAG 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.