Where Are Most Corporate Relocations Taking Place?
In the past couple of years, states such as California and New York have seen the largest outflux of residents, fueled by employees’ ability to work from anywhere and their need to escape dense urban environments. Many companies chose to follow their employees and relocate their headquarters to more business-friendly states in order to reduce their overall costs and improve efficiencies, but also to pursue further growth by accessing the highly talented employment pool generated by local universities.
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Commercial Property Executive identified five states that attracted some of the most notable corporate relocations since the onset of the health crisis. The opportunities in these states, coupled with their local support systems, are hard to match by other environments in the country. This is why commercial real estate experts expect these states to continue to attract even more corporate relocations and expansions going forward.
Companies moving to Texas
With its pro-business climate, access to talent, solid fundamentals and low tax rates, Texas has seen more corporate relocations since the onset of the pandemic than any other state in the country. Most of these moves were part of the exodus from Silicon Valley, generated by California’s high tax rates and unaffordable housing costs that have made living and doing business difficult within the state.
Austin became a highly sought-after destination for tech giants such as Tesla, which announced its relocation from Palo Alto, Calif., to the metro last year. Data center powerhouse Digital Realty and Oracle also moved to Austin from Redwood City, Calif., in the first year of the pandemic. Other notable names include venture firm 8VC and software company FileTrail, both relocating from San Jose, Calif., to Silicon Hills due to their rapid growth and need to accommodate their rapidly expanding teams. CrowdStreet also opened a second office and relocated its corporate headquarters from Portland, Ore., in 2021.
Another appealing metro in the Lone Star State is Dallas. According to a 2021 report from CBRE, tech companies were responsible for 38 percent of office space leases in the metro throughout the year. Fortune 500 company AECOM relocated its global headquarters from Los Angeles to the city in October 2021. Meanwhile, foreign companies such as Tel Aviv-based BackBox and Dublin-based software firm Origin moved across the pond and opened their first U.S. headquarters in Dallas and Plano, respectively.
Thanks to changing business needs and employee lifestyle preferences, as well as opportunities for cost savings, Hewlett Packard—which already had a substantial presence in the Houston metro—announced its move from San Jose to the city in 2020.
Companies moving to Florida
The major exodus into Florida from pricier gateway markets is also notorious. Companies are attracted to the Sunshine State’s highly educated and diverse talent pool, favorable tax environment, quality of life and warm weather, as well as ample residential and commercial options that provide quality live-work-play settings.
“Companies in the finance and tech sectors make up the largest share of new-to-market office lease transactions. Most recently, we are seeing increased demand from the legal sector and other professional services firms,” Tere Blanca, CEO of Miami-based Blanca Commercial Real Estate, told CPE.
Miami emerged as one of the biggest winners from the pandemic, being one of the few office markets where vacancy declined in the past year, according to CommercialEdge data. The metro attracted a series of corporate relocations from New York and Connecticut, including crypto companies Blockchain.com and BlockTower Capital, but also aircraft operator AerCap.
Billionaire investor Carl Icahn, CEO of Icahn Enterprises, moved his office, half of his staff and himself from Manhattan to nearby Sunny Isles Beach. Colony Capital relocated its corporate headquarters from Los Angeles to Boca Raton, while West Palm Beach attracted the likes of Elliott Management and Point72 Asset Management, both relocating from the Northeast.
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Meanwhile, Central Florida became a corporate relocation magnet of its own: The Walt Disney Co. plans to transfer its entire Disney Parks, Experiences and Products division from California to Orlando’s Lake Nona region by the end of 2022. Conti Federal Services and InnovaCare Health also leased space within the metro, moving from New Jersey and White Plains, N.Y., respectively. Further down south, Minnesota-based SkyWater Technology took over the University of Central Florida’s 109,000-square-foot lease in Kissimmee, Fla.
Tampa’s attractive cost of living, climate and abundant cultural and recreational options attracted MRA Capital Partners from New Jersey and transit packaging company Signode from Chicago, to name a few. Two Canada-based tech companies, CodeBoxx and RabbtRun also moved their headquarters to nearby St. Petersburg, largely because of the state’s strong telecom and tech sectors.
Companies moving to Arizona
Arizona is attracting relocating businesses through its pro-business legislation, enforced by a no corporate franchise tax policy. Access to great labor, diverse real estate opportunities and affordability—both on the commercial real estate and lifestyle fronts—transformed the state into one of the top destinations for corporate relocations.
Ryan Bartos, senior managing director at JLL, believes Phoenix’s office inventory in particular is filled with well-located, high-end construction, dubbed as environments that foster collaboration and offer comforts that assist with retaining and attracting talent.
“The greatest amount of local office interest and activity has come from technology firms,” he said. One of the biggest names is Sendoso, which ditched San Francisco for Phoenix in a move expected to be completed by November 2022. Relocations like these converted Phoenix from a “fly over” city into a solid Tier 2 market, competing with the likes of other dynamic markets such as Austin or Denver, Bartos added.
Tempe, which is part of the Phoenix metropolitan area, has also been attracting a diverse roster of companies from the Bay Area, such as Moov and Align Technology. Canadian company Exro Technologies located its U.S. headquarters within the state, choosing Mesa as its flagship. Further down south, tech company Viavi Solutions relocated from San Jose, Calif., to Chandler. Property technology company HomeLight also announced that it was moving its San Francisco headquarters to Scottsdale.
Companies moving to Georgia
Home to various Fortune 500 companies and a rapidly growing startup environment, Georgia’s diverse culture provides opportunities for businesses to thrive. Since 2021, the Atlanta metro has been providing new monetary incentives for purchasing facilities and offices, becoming one of the most sought-after places for companies to place their headquarters.
According to a 2021 report from CBRE, the Georgia Institute of Technology produces the highest number of tech graduates per year in the nation. What’s more, the metro’s multiple tech incubators—Atlanta Tech Village, Atlanta Tech Park and Propel, to name a few—act as catalysts for the sector’s long-term growth.
Some of the biggest names to move within the state is Netherlands-based e-mobility charging system leader Heliox, which decided to locate both its North American headquarters and research and development training facility in Atlanta. This way, the company is closer to both its customers and a highly educated talent pool.
One of the latest additions to the city’s prestigious tenant roster includes Seattle-based Outreach, a sales engagement software business which announced its plans to open a new regional headquarter building in the area. Other names include the former ServiceMaster Brands—now known as Terminix Global Holdings—which moved its headquarters from downtown Memphis, Tenn., as well as Railroad company Norfolk Southern, which relocated from Virginia to Midtown Atlanta in a move initially intended as a recruiting tool, but ultimately became a full-scale relocation.
Kentucky-based pizza giant Papa John’s International, one of the country’s largest pizza makers, also moved into its new Atlanta headquarters last year. Outside the metro, Remington—the nation’s oldest gun manufacturer—moved its flagship from Ilion, N.Y., to LaGrange.
Companies moving to Tennessee
Entrepreneurs who are seeking a pro-business environment for their companies or who want to relocate for better opportunities, lower taxes and living expenses, are also choosing Tennessee.
While most people visit the Music City for its rich lifestyle, Nashville is seeking to attract businesses with incentives such as job tax credits, infrastructure assistance, energy credits, low-cost loans and grants. In addition, there’s preferential local tax treatment for companies—Nashville is an easy place to recruit and also a place that employers’ existing employees are willing to relocate to.
“We have seen interest from multiple types of companies wanting to move to Nashville, but the tech companies seem to get the most press. Overall, the quality of life and number of college graduates moving here have the attention of all companies,” Sarah Pettigrew, executive vice president for JLL Nashville, told CPE.
NTT Data was one of the companies that chose to move its global headquarters to Nashville from Plano, Texas. Other examples include Revance Therapeutics, which moved from Newark, Calif., health-care tech startup DARVIS from San Francisco and health-care software firm HST Pathways from Lafayette, Calif. One of the largest moves was The Daily Wire’s September 2020 relocation from Los Angeles.
Outside the Nashville metro, Tokyo-based Advanex Inc. left behind Cypress, Calif., for White House.
According to Pettigrew, the corporate relocations are great for Nashville’s economy as long as the city is prepared and plans in advance—including having the proper infrastructure to accommodate the growth. “Nashville has a charm and authenticity to it, and as a city we will have to be careful not to lose it. With the right planning, we can grow and maintain our culture,” she said.
