Texas winning race of California relocations
Lower taxes, fewer regulations among top reasons companies are leaving the West Coast; 57 moved to the Austin area
Texas is claiming the headquarters of California companies at more than four times the rate of its nearest competitor, according to a study by McKinney-based Spectrum Location Solutions and Stanford University’s Hoover Institution released Tuesday.
The Lone Star State won 114 California corporate relocations from Jan. 1, 2018, to June 30 of this year, 89 more than Tennessee, which had the second-most wins in that period.
Fifty-seven of those companies planted corporate flags in the Austin area. North Texas claimed 41, Houston got nine and the San Antonio area attracted six.
Study authors Joseph Vranich and Lee Ohanian cited high taxes, harsh regulatory policies and rising energy and utility costs as factors contributing to the California exodus.
“Moving a company to Texas, there’s a sense of calmness and a sense of certainty,” said Vranich, a longtime critic of California’s business environment who moved his own firm out of the state in 2018. “Regulations, per se, are not bad. But having some stability in knowing what they are, how much they might change, that stability is evident in Texas.”
Texas has welcomed dozens of high-profile companies from major West Coast metropolitan areas in recent years, including engineering giant AECOM, which recently announced its headquarters relocation from Los Angeles to Dallas.
The pandemic offered an ideal exit opportunity for companies looking to leave expensive cities like L.A., San Francisco and New York City. There were nearly 70 relocation and expansion announcements in the D-FW area last year, according to Dallas Regional Chamber data. So far this year, there have been 50.
That trend is showing no signs of slowing down. For the first six months of 2021, the number of headquarters relocations out of California happened at twice the rate of previous years.
High energy prices proved important to companies, according to the Spectrum study. Though Texas runs in the middle of the pack at 29th for commercial energy prices, it far outperforms California, which placed 48th. California’s average commercial energy price was $17.20 per kilowatthour in March, compared to Texas’ average price of $10.41.
“For certain kinds of facilities, you’re going to cut your electric bill probably in half,” Vranich said.