Despite Conn. incentives, new hedge funds are choosing Manhattan
New hedge funds are increasingly setting up shop in Manhattan, in order to be more accessible and attractive to investors, the Wall Street Journal reported.
Of the hedge-funds started between 2003 and 2008 in Manhattan, Greenwich or Stamford, 86 percent choose Manhattan, according to data from eVestment, which tracks the hedge-fund industry. But in 2009 and 2010, 92 percent of new funds chose to set up shop in Manhattan over Stamford and Greenwich, and data for 2011 shows a continuation of that trend.
“There are blips in the data, but it’s clear launches shifted toward New York after the crisis,” Peter Laurelli, eVestment’s head of research, told the Journal.
Funds are eyeing potential investors who may not have the time nor the inclination to make the long commute up to Connecticut, but could be available for a quick meeting in the city.
“Being in New York — it just makes a lot of sense to make life easier for your customers,” said Steven Bloom, co-founder of North Creek Butler, a hedge-fund “accelerator” that raises money for early-stage and small hedge funds.
“Conference calls just don’t go over the same way,” said Eagle River Chief Operating Officer Jonathan Bloom, whose firm launched in Manhattan in 2010.
Other recent entrants to the New York City hedge-fund space include Global Management, River Birch Capital, and 400 Capital Management. Office space in Manhattan is also becoming more affordable to these startups; In 2009 and 2010, the average asking rent for Class A Midtown buildings plummeted into the mid-$60s per square foot from its pre-recession high of $129.44 per square foot, though rents are on the rise again.
Connecticut’s governor Dannell Malloy has devised incentives for companies to set up shop in the state, as The Real Deal previously reported. His First Five incentive program allocated $200 million in incentives — including low-interest and forgivable loans, tax credits, reduced electricity rates and training grants to the first five companies that guarantee an increase of 200 new jobs. [WSJ] —Hiten Samtani