MIAMI — Move over, Texas. The Lone Star state has grabbed headlines as tech companies like Oracle, Hewlett-Packard Enterprise and billionaire Elon Musk are planning to move major operations from California for its greener pastures and — lower taxes. 

But now, Miami is becoming a magnet for companies trying to escape from high taxes and over-crowding.

The Sunshine state’s most famous city has tried for years to convince companies it’s not just a playground for partying vacationers, but fertile ground for finance and tech firms, promoting a start-up vibe.

Then the coronavirus pandemic hit.

“I’ve been buying real estate in Miami for over 20 years, and it has been a great flight. Since Covid started, it’s a rocket ship,” said developer Alex Rodriguez — as in “A-Rod,” the former Major League Baseball superstar who has been investing in commercial and residential properties. 

Rodriguez has recently partnered with Barry Sternlicht of Starwood Capital in developing restaurant and retail space inside Starwood’s new 144,000 square foot headquarters under construction in Miami Beach, the first Class A office space in that community.  

Sternlicht moved Starwood from Greenwich, Connecticut, in 2018. Taxes had a lot to do with it, but he also blames political leadership, especially New York City under Mayor Bill de Blasio. 

A reckoning for high-tax states

Corporations on the move

The migration to Miami gained steam as firms like Universa Investments moved from Los Angeles and Nucleus Research from Boston. Then came Starwood, and now Blackstone is opening its tech headquarters there. A growing number of Silicon Valley investors are taunting California on Twitter as they head east to Miami — names like Jon Oringer who founded Shutterstock, Keith Rabois of Founders Fund and Shervin Pishevar who helped launch Hyperloop One. 

“They don’t know what side their bread is buttered on,” Scott Absher said, referring to California’s political leadership. Absher is CEO of ShiftPixy, a tech start-up for part time workers that just moved its headquarters from Irvine, California, to Miami’s Brickell Key. The lease on his new waterfront office is about 25 percent less than what he paid in California, money the company needs as it tries to reach profitability. 

According to the Miami Downtown Development Authority, the average cost per square foot of office space is $45.45, compared with $64.12 In San Francisco.

“I came to California in the mid-90s, and one of the things that I observed was just this bubbling of activity and excitement and optimism. I don’t see that as much anymore,” Absher said. He admits to feeling a bit “melancholy” giving up his California driver’s license but believes he’s found the innovative energy and welcoming atmosphere toward business in Miami that he used to feel in the Golden State. “I think you’ve got to look outside. You got to look ahead.”

 An analysis by LinkedIn of where tech workers are moving this year shows that Miami’s technical workforce is up 3% in 2020 (Madison, Wisconsin, had the largest growth — 75 percent— but the total workforce is much smaller). 

Home sales and prices in the Miami area are up double digits from a year ago, and executives thinking of moving here are now asking about the quality of schools, not just about the tax breaks. 

Talent finally showing up