Miami’s mayor Francis Suarez is suddenly fielding calls from top corporate executives. Recently, he’s spoken with Tesla CEO Elon Musk, Twitter CEO Jack Dorsey, and Google CEO Eric Schmidt, among others. In addition, Palantir’s Chairman Peter Thiel recently bought a multi-million mansion in Miami. The city also just named its first Chief Technology Officer, who Suarez says will help streamline bureaucratic procedures for high-tech firms in Miami.
Oracle recently announced it’s moving its corporate headquarters from Silicon Valley to Austin. It says the move will position the company for growth and provide a “more modern approach to work” by offering employees flexibility in where and how they work.
- Hewlett Packard Enterprise is moving its corporate headquarters from San Jose to outside Houston.
- Elon Musk moved to Texas.
- Charles Schwab recently moved to Westlake, Texas.
- Toyota, Samsung, and McKesson all recently relocated to Dallas-Forth Worth.
- REI Co-op sold its corporate campus in Bellevue, Washington.
It’s not just the big players either. QuestionPro, a startup from San Francisco, moved its headquarters to Austin. Others are choosing to start there altogether.
What’s driving companies to relocate?
There are multiple reasons so many companies are researching and making moves that are taking them beyond Silicon Valley and the Bay Area.
Some companies move to lessen their tax burden, which can vary quite a bit around the country. Forty-four states and the District of Columbia levy a state corporate income tax, ranging from North Carolina’s 2.5 percent to Iowa’s 12 percent. The rest don’t charge a state corporate tax at all.
California’s personal income tax rates are among the highest in the nation, whereas neither Florida nor Texas have personal income taxes. California is ranked 48th in the country in terms of business climate and regulatory burdens.
2. New markets
Sometimes, a move to a new location is a business opportunity as well as a corporate logistical move. Perhaps business slowed down or even started to decline in the original location. Making a strategic move to a different, carefully chosen location can be a smart response.
3. Long-term growth
Other reasons for seeking a new location are the opportunities to overcome various shortcomings that limit a company’s long-term growth. Perhaps the company has outgrown its facilities, or its rent has skyrocketed. Other location-related factors may be holding the company back.
Then there are state or local regulations that can limit a company’s expansion. “…The freedom to operate without the heavy hand of regulation means a lot,” says Austin Governor Greg Abbott. He points out some companies are looking for a location that allows them the independence, autonomy, and freedom to chart their own course and grow their business.
4. Remote work
Many businesses have discovered that remote work, accelerated by COVID-19, has been a success, and they’re allowing employees to remote work permanently. Employees like it too, but many also want the flexibility to live where it’s affordable.
Laura Huffman, President and CEO of the Austin Chamber of Commerce, says quality of life is another important consideration that drives remote work. “I think 2020 has taught us all that we have more choice when it comes to where we live,” she says.
5. Population changes
Not only are major financial centers like the San Francisco Bay Area, Los Angeles, New York, and Chicago seeing fewer companies based there, but populations have dropped in those areas as well. While real estate prices in the San Francisco Bay area have long been sky-high, the departure of workers from California has caused San Francisco rents to fall almost 30 percent since January 2020.
Technology enables work from anywhere
For now, financial centers such as New York City and San Francisco are still massive work hubs, but the business exodus is indicative of a trend. Workers are no longer tied to location. Remote work, which was already growing steadily before COVID accelerated, has taken off. Many employees who can work from anywhere are now welcome to do so permanently.
Overall, remote work is much more accepted now than it was pre-COVID-19. According to PwC’s extensive U.S. Remote Work Survey, conducted in November and December 2020, 83% of employers and 71% of employees say remote working is successful. It’s telling that 72% of U.S. executives plan to make their largest investments going forward in tools for virtual collaboration such as video conferencing.
Companies now also have the tools to support a growing distributed workforce. From lightning-fast internet connections to cloud-based tools (unified communications, for example), businesses have a much easier time allowing employees to work from anywhere.
What this means for work
As more businesses move or start outside of traditional financial centers, more employees will work from anywhere, hence the trend toward hybrid work models. Businesses will see a much more distributed workforce, where teammates can be states or countries apart.
Some financial centers may not recover, and new ones will crop up. As we are already seeing, companies will be more open to hiring remotely, and employees will have access to companies they could not have worked for before without relocating.
Our methods of working, too, will probably never look the same. While different companies will certainly have various types of work opportunities—at the office, remote, or a hybrid of the two—it’s possible you may soon have a job where you never have to step foot in an office again.