Why are Businesses Moving to Texas?
When it comes to corporate relocations, Texas is hot, and we are not talking about the temperature or humidity. Companies from around the country are taking a hard look at moving to the lone star state.
Why are companies moving to Texas?
Why is Texas a fantastic place to work and live?
In this report, you will learn about the main drivers for Texas corporate relocations.
Tesla, Oracle, Caterpillar, and Hewlett Packard are just some of the big names that are moving to Texas, and it is not just a corporate, bottom-line decision. It has as much to do with lifestyle. Case in point: Elon Musk, the CEO of Tesla, who can live anywhere he wants on the planet (and soon maybe another planet), is reportedly shopping for homes in Austin. Dropbox CEO Drew Houston and Douglas Merritt, the CEO of technology firm Splunk, are also new residents of Texas. During a recent interview, Joe Rogan, a comedian and arguably the most successful podcaster in the country, described his recent move from Los Angeles. He said that he “had to get out of California.” He took his family to visit Austin. They loved it. And the rest is history as his production company is now based in Texas.
Moving to Texas Facts and Stats
The International Economic Development Council regularly surveys corporate executives and for the eighteenth time since 1996, Texas was named the number one state for business in America. Executives cited the overall business climate, favorable tax situation, overall pro-business regulatory environment, and access to talent as key drivers. The fundamentals remain solid.
- Texas is the 9th largest economy in the world
- For 20 years in a row, Texas has been the #1 US exporter and exported $375B in 2021.
- Texas led the nation in high tech exports for the 9th consecutive year and exported $50B in 2021.
- It is the largest energy-producing state in the nation.
- Texas has a 90% graduation rate which is among the top 5 highest in the nation.
- Texas has more than 14.5 million people in the civilian labor force.
- In 2021, Texas added 694,400 jobs which makes the state a leading jobs creator.
Let’s look at who’s already arrived or coming soon. Hint, there’s an exodus from Silicon Valley.
List of companies that moved to Texas
- Elon Musk’s Boring Co., which develops tunnel systems, recently moved its corporate headquarters from Hawthorne to Austin, Texas.
- New York-based manufacturer of specialty materials, Alkegen (formerly known as Unifrax), along with nearly 250 employees is moving to Dallas from Buffalo, New York.
- Previously Las Vegas based Wikilane Inc., a top SaaS provider announced that the company will be headquartered in Austin, Texas and will officially be known as Invoice Home Inc.
- Chevron is selling its headquarters campus in San Ramon, California and moving jobs to Texas. The oil company is encouraging employees to move to Houston and will cover relocation costs for those leaving for the Texas office.
- Caterpillar is moving its global headquarters to Texas. The construction equipment maker’s CEO said it was “in the best strategic interests of the company to make this move” both in respect of profitable growth and building a more sustainable world.
- Hewlett Packard, which already has a substantial presence in Houston, announced that it will move its headquarters from San Jose.
- Oracle, a company that is seemingly synonymous with California, announced plans to move its headquarters from Redwood City to Austin. Oracle executives said the move positions the company for growth and provides its personnel with flexibility about where and how they work.
- Venture capital firm 8VC is also moving from Silicon Valley as is Firetrail, a records management software company, now formerly based in San Jose.
- Amazon chose Houston for one of its prized Tech Hubs. The company occupies 25,000-square-feet of space in Citycenter with a team of more than 150 Amazon Web Services employees. The company said,
HOUSTON IS A FANTASTIC PLACE TO LIVE AND WORK, AND HAS A STRONG LOCAL ECONOMY THAT WE LOOK FORWARD TO INVESTING IN AND GROWING TOGETHER.
- Amazon has invested $10 billion into Texas since 2010, and the company said Houston’s diversity, universities, and quality of life were attractive to Amazon.
- Telecommunications equipment firm DZS Inc. and survey software company QuestionPro have plans to relocate to Texas.
And the list goes on as California’s losses are Texas’s gains. The migration from California is not new but rather heightened. According to U.S. Census data, more than 687,000 Californians have moved to Texas since 2010. About 13% of new Texas residents have come from California.
Moving to Texas, The Land of Opportunity
In 2021, Texas ranked as U-Haul’s number 1 growth state based on its migration trends measurement. The lone-star state earned the top title with over 2 million on-way migrations. Texas, well known for its solid infrastructure and business-friendly environment, continues to be the driving force behind people pouring into the state as its major cities become melting pots for growth and economic diversity.
Each of Texas’s four major cities brings their own uniqueness and represents diversity of the great state well.
Dallas Fort Worth
Dallas Fort Worth is an area recognized for its booming industrial market, especially with e-commerce skyrocketing in popularity. More companies than ever are reliant on same and next-day delivery as well as last-mile distribution to stay competitive. Being the furthest most north major city in Texas means Dallas is also the most central to the country; this allows for companies shipping all over United States, to quickly execute on customers fast shipping expectations. Many consider Dallas, the trading post of Texas.
Houston, in recent years has been inundated by green tech and information technology, quickly being dubbed, “the Silicon Bayou.” Houston has always been a city where energy companies thrive. As the states long standing energy leader, there is no wonder why green tech wants to be there.
A second factor for tech growth in the Silicon Bayou is the port of Houston. As one of the country’s top exporting ports for technology, it is only reasonable for a tech company to take advantage. Additionally, the Houston Ship Channel expansion, with an expected completion date of 2025, will widen the channel from 530 feet to 700 feet, creating a progressively safer port while increasing port job opportunities number of goods exported.
Known for its strong military presence, San Antonio hosts one of the four Primary Subordinate Units of the United States Air Force security service operations. Also located in San Antonio is NSA Texas, well known for its large private sector presence in the cybersecurity and intelligence space. Nicknamed “Cyber City, USA,” San Antonio, has one of the highest concentrations of cyber security professionals and businesses in the United States.
The magnet for California relocations to Texas, Austin, continues to feed the persisting trend of west coast migration. A popular nickname for the city because of its draw to Californians and California-based tech is “Silicon Valley 2.0.” Overwhelmingly, California technology companies pick Austin for new corporate facilities as venture capital is seemingly flush in the city. Interestingly, Austin opened its doors to more new residents from the Bay Area than from any other region outside Texas during the Pandemic.
Who’s Moving to Texas?
The Texas Demographic Center highlighted the demographic and socioeconomic profile of people relocating from other US states to Texas. According to their findings, 55% of net domestic migrants are between the ages of 25-44, 74% are ethnically diverse, with 27% being born in another country. Moreover, 67% of people who are moving to Texas have children, and 47% of people relocating are opting to live in a rental household. As recorded, 45% of new Texans have a Bachelor’s degree or higher with 80% earning beyond the median income of current Texas residents and hold jobs in business, computer, engineering, and health care.
Source: Texas Demographic Center
Main Drivers for Texas Relocation
According to economic development officials, the state is seeing more corporate relocations and expansions than it has in a long time. Other states, hit hard by COVID-19 government shutdowns, have given CEOs pause. Top executives are seeing opportunity when they look at Texas and witness a healthy economy that was driven by a more methodical, careful, and science-driven approach toward reopening. Metropolitan areas in Texas led the nation in getting people back in their offices. According to security company Kastle, workers returned to office buildings in Austin, Dallas, and Houston at a faster pace than for buildings in cities like New York and San Francisco.
According to the Texas Economic Development, they are monitoring nearly 89 active corporate relocation and expansion projects in and into the state, and inquiries for relocations are not slowing down. Austin appears to be one of the main beneficiaries as the Austin Chamber of Commerce reports that new and expanding companies created more than 112,00 new jobs from 2016-2022.
Recently, Pabst Brewing relocated from Los Angeles to San Antonio, citing great talent available at a lower cost. An executive said that San Antonio is filled with opportunity and creativity as well as a great talent pool, high quality of life, and is experiencing a cultural boom. Affordability makes it attractive to businesses and employees. In recent years, Dallas-Fort Worth has benefitted from the fundamentals of affordable home prices, lower costs of living, and low taxes as national brands like Charles Schwab, Deloitte, JP Morgan Chase, Liberty Mutual, McKesson, State Farm, and Toyota have either relocated or significantly expanded their operations. Learn more about the unique development and dynamics in Dallas, specifically to the Richardson IQ.
Returning to the numbers, we see that the economic environment in Texas makes a convincing case to move a company across the country.
Innovation Supporting Texas Relocations
As a state, Texas ranks as one of the most innovative in the country. Within the state, the Dallas Fort-Worth Metroplex and the city of Houston rank in the top 10 of the world’s most innovative cities cited for their encouraging entrepreneurial landscapes and innovation enablement.
Throughout both cities, innovation is thriving, though one area in specific, The Richardson Innovation Quarter (Richardson IQ), is gaining significant attention from some of the world’s top telecommunications and software companies. The IQ is a mixed-use 1,200-acre district in Richardson, TX, a suburb of Dallas, solely dedicated to forward-thinking companies and entrepreneurs.
The IQ is home to numerous well-known companies such as Dell Technologies, Ericsson, Honeywell, and more. Today, what was once previously recognized as the “Telecom Corridor” during the dot-com era is base ground for more than 600 technology companies. Four fundamental dynamics typify the draw to the area:
- The districts’ tactics of streamlining building identities to create an easily navigable area
- The support of modernization through the waiving of development and permitting fees
- Allowing flexibility in zoning to welcome new buildings and modern finishes
- The creation of innovative buildings to house new businesses such as start-ups
The Richardson IQ is just one example of the direction Texas has been heading for more than a decade: toward nationally recognized leadership in forward-thinking innovation.
Economic Environment & Growth
While the energy sector remains a prime driver of the Texas economy, several other key industries have begun to take a major foothold, particularly information technology. Aside from the companies named earlier, Dell, Texas Instruments, and Rackspace Hosting are all headquartered in Texas, while AT&T and others have significant presences. This activity has enabled Texas to rise above California as the nation’s top exporter of technology. Nowhere is the information technology trend more apparent than Houston which is already developing a national reputation as the “Silicon Bayou”. Aside from Amazon, Google has built a presence there, capitalizing on a wealth of innovation and talent in the area. Greentown Labs, a startup incubator for clean technology chose Houston for its second location because of its reputation as the world’s energy capital.
Associated high-wage jobs draw high-quality workers who need a place to live, so the construction industry is one of the fastest-growing sectors in the state. Housing starts and commercial construction are both on the rise.
With the addition of new residents with more disposable income and tourism comes the need for bars, restaurants, grocery stores, etc. Leisure and hospitality have become major drivers and it’s expected that the lodging industry will follow on an upward trajectory.
Transportation continues as a major driver. Congress recently passed the 2020 Water Resources Development Act that formally authorized the expansion of the Houston Ship Channel.
The Port and its public and private terminals moved nearly 351.6 million tons of cargo in 2021, an increase of nearly 3% over 2020. The value of the cargo is estimated at $273.1 billion, almost 40% higher than that recorded in 2019.
With more companies discovering the many benefits of moving to Texas, look for corporate relocations to continue to increase through 2023 and likely skyrocket in coming years.
List of Fortune 500 Companies in Texas
- Academy Sports and Outdoors
- American Airlines Group
- Baker Hughes
- Builders FirstSource
- CBRE Group
- CenterPoint Energy
- Cheniere Energy
- Commercial Metals
- Core-Mark Holding
- Crestwood Equity Partners
- Crown Castle International
- D.R. Horton
- Dell Technologies
- Energy Transfer Equities
- Enterprise Product Partners
- EOG Resources
- Group 1 Automotive
- Hewlett Packard Enterprises
- Jacobs Engineering Group
- Kinder Morgan
- Occidental Petroleum
- Phillips 66
- Pioneer Natural Resources
- Plains GP Holdings
- Quanta Services
- Southwest Airlines
- Targa Resources
- Tenet Healthcare
- Texas Instruments
- Valero Energy
- Vistra Energy
- Waste Management
- Westlake Chemical
- Yum China Holdings