Military-grade eyewear maker Wiley X broke ground on its new headquarters building in Frisco’s Star Business Park a few weeks ago. The company had operated out of the Bay Area since it was founded in 1987.
“We were doing the research and not seeing any obstacles,” said David Villarina, director of marketing for the company. “The arrows were pointing to why didn’t we do this sooner?”
Companies continue to flee California for Texas, and the pandemic didn’t dampen the trend: 29 companies moved their headquarters to Texas in 2019; 31 in 2020; and already, 21 have made the move in 2021.
“I’ve done studies for 12 years now, and every year, Texas is the number one location for California companies to move to,” said Joe Vranich, who runs site location firm Spectrum Location Solutions out of McKinney.
Corporate interest was up for the duration of the pandemic, confirmed Dallas Regional Chamber’s senior vice president of economic development Mike Rosa. The DRC is tracking 109 projects at the moment, including 24 companies considering headquarters moves and 22 moving corporate offices. In previous years, it typically tracked 50 to 60 projects at any given time, he said.
“When you look at the largest market in the U.S. that is also considered business-friendly, we’re number one,” Rosa said.
Texas tops the list of states with the most new projects for 2020, according to Site Selection magazine. It had 781, while California was ranked number 16 with 103. In addition, Dallas-Fort Worth ranked second in the nation for metro areas with the most projects, behind only Chicago.
The companies that move to Texas span every industry, from eyewear to software and food distribution. But their reasoning is mostly the same: the pro-business climate with no corporate or personal income tax, the central location, the large DFW International Airport, the state’s accessible talent pool and the quality of life it offers.
The business-friendly environment in Texas isn’t just about taxes. It’s also about the support — including incentives — from cities.
Frisco offered Wiley X $4,225 for each full-time job created with a minimum requirement of 88 positions. It currently has a staff of about 100 in California and hopes to eventually move everyone to the Frisco office, which is expected to open during the second quarter of 2022.
“There’s no shortage of talented people in North Texas, as evident by how many businesses are moving to the area and thriving,” Villarina said. “We hope to be a part of that list as well.”
Notably, the last five Fortune 500 companies to relocate their headquarters to North Texas all came from California over the last six years. These include CBRE Group, the world’s largest commercial real estate services and investment firm; engineering giant Jacobs; health care company McKesson Corp.; convenience store supplier Core-Mark International; and financial services company Charles Schwab.
“With the region’s highly skilled talent pool, we have been growing rapidly in the area, and that will continue over the coming years as the final phase of our 70-acre, state-of-the-art campus in Westlake is nearly complete,” a Charles Schwab spokesperson said.
Vranich, who helps four to seven companies move each year, said companies typically contact him about six months to three years before they relocate, depending on when their lease is up. He helps them narrow their list down to 20 locations and then collects data on them, including demographics, tax rates, regulations, permit rules, crime rates and school scores. When executives narrow it down to three places, they typically take a trip to each place.
The only issues that come up about North Texas are its traffic and the hotter weather, Vranich said. However, both are relative. For those coming from California, the traffic is nothing compared with Los Angeles and the Bay area, he said.
The DRC’s Rosa said the real estate environment is also a plus, something that influenced Lion Real Estate Group to move its headquarters to Dallas from Los Angeles this year.
The real estate investment and asset management firm, which has about 150 employees and about $900 million in assets, said Dallas supports its strategy to acquire desirable multifamily assets in Texas and across the Sunbelt and Southeast. The firm owns five residential properties in the Lone Star State.
“I went to SMU and was a big fan of the city, but the real driver of the move was the connectivity to all of our properties and favorable tax situation,” said firm co-founder Jeff Weller.
The Dallas office has 15 to 20 workers, and Weller expects that to double in the next five years.
SignEasy, which provides an easy way to send and sign documents from your phone, tablet and computer, moved its headquarters to Dallas in the summer of 2019 after about eight years in California. It has backing from Yelp CEO and co-founder Jeremy Stoppelman, Freshworks CEO Girish Mathrubootham and TSheets CEO Matt Rissell.
“We were looking for a place that seemed more affordable with a better quality of life, and Texas definitely fit that bill, especially Dallas,” said SignEasy CEO Sunil Patro.
The company has 100 employees, many of which are engineers and developers in Bangalore. It has doubled in size since the start of 2020. It has six U.S. employees, including three at its office in Dallas in a WeWork co-working space. It plans to hire locally in Dallas for a number of roles and make it the hub for partnerships, global strategy and executive functions such as the chief operating officer, head of partnerships and head of product marketing.
Another factor encouraging companies to abandon the nice weather on the coast is overall population growth. D-FW has had the largest population accumulation in the last decade of any U. S. metropolitan area, according to the U. S. Census Bureau.
“When companies think of moving or growing, they’re thinking, ‘Will this place we’re moving to be great five, 20 and 30 years from now?’ “ Rosa said.
Companies that contact the DRC are curious about infrastructure, neighborhoods, schools and the quality of life in North Texas, Rosa said. The power grid outage earlier this year has come up in conversations but hasn’t been a barrier, he said.
“It’s not a negative at this point because we’re able to tell why it happened and why it won’t happen again,” he said.
Food service company Quality Custom Distribution, which works with Chick-fil-A, Chipotle and Starbucks, moved its headquarters to Dallas from Irvine in 2019 and said it had no system impact from the power outage. The past year, it’s seen growth as fast food places learned to maximize mobile and drive-through orders.
QCD, which picked Dallas based on its central location and talent pool, started with 49 new associates in Dallas and has grown that to 90 in the year and a half since it moved here. Its North Dallas headquarters supports 28 distribution centers across the U.S. that serve about 7,500 quick-service restaurants.
The DRC said it works with companies across all industries but the industry most interested in North Texas seems to be financial companies. One of those is First Foundation, which moved its headquarters into The Crescent in Uptown Dallas earlier this year from Irvine.
The company’s CEO, Scott Kavanaugh, who lived in Dallas 35 years ago, said it listed similar open positions in California and Texas this year and has been able to fill more of the Texas positions so far.
“A lot of the move had to do with politically some of the things that are affecting many companies in California,” he said. “It led to us thinking about where would we geographically want to be, and when you look at the landscape, in my mind, the clear winners are Florida and Texas.”
The other draw of Texas for Kavanaugh and others is less about data and more personal.
“I’ve been absolutely amazed at the number of bankers to reach out and say hello and welcome me, and I’ve done the same back,” he said. “The kindness and warmth people have shown is different than I would say is in California. It’s been a real pleasure.”
