Most of us have heard of the Great Relocation - but it’s not just employees upping sticks and moving to ‘better’ locations. Following a global pandemic, many people have had time to reflect and reevaluate their base - including corporate giants and CEOs.
One of the major trends currently sweeping the corporate world is large-scale company relocation. Well-established companies and brands that have been settled in the most popular, business-savvy, and high-flying locations, like Silicon Valley, for years (some decades) are packing up their offices and moving elsewhere. Last year, the proportion of early-stage VC investments going to Silicon Valley startups dropped below 30%. But why?
Companies like Uber, Airbnb, Twitter, Pinterest, and Yelp are all either downsizing their Bay Area offices or fleeing the city completely, leading many people to wonder not only what’s fueling this “tech exodus” - the term coined by VC investors - but also what the rising cities attracting big companies have to offer.
Let’s take a look at some of the factors driving big companies to relocate:
Taxes vary from state to state, but many companies decide to relocate to reduce their tax burden. Forty-four states across the US impose a state corporate income tax, which ranges from 2.5% in North Carolina to 12% in Iowa. For companies wanting to lower their taxes and reduce operating expenses, relocating may be a wise move.
Moving to a new city with a rising ecosystem is often an opportunity to expand into new markets - and many key players in the corporate industry are eager to enjoy a slice of a different pie. A relocation can provide new business opportunities and support a company’s long-term growth plans, particularly if its current base is limited.
Let’s be honest, who isn’t working remotely? With 61% of workers saying they’d leave their job for a fully remote opportunity, it’s no wonder more companies are embracing remote and hybrid working models. A 2021 survey by the San Francisco venture fund, Initialized, found that 42% of its firms’ founders said that if they were starting a business today, their preferred “place” to launch it would be through remote or distributed work. Many big companies are downsizing or moving offices simply because their staff no longer require an office to work from.
Tesla moves to Texas - and tech companies follow
Tesla announced its relocation from California to Texas last year, choosing Austin as its base. It’s not difficult to see why; Austin’s population growth has outpaced that of every other major US city since 2010 and boasts low tax rates. Other companies, like Hewlett Packard, have chosen to open their new global headquarters just north of Houston. Texas is now home to more fortune 500 companies than any other state.
Who else has moved there?
Big names like Citadel, Goldman Sachs, Nucleus Research, and Blackstone have already made a move to the Sunshine State. Not only does Florida have one of the best climates in the US, but it also boasts a smart tax structure, impressive education system, and favorable business regulations - many say the momentum behind big companies moving to Florida has been building for years.
Florida added more tech companies in 2021 than any other state. Who else is following?
The last two years have seen many companies relocate to Arizona, including DoorDash, Moov Technologies, and Viavi Solutions. Before the end of last year, more than 270 companies across the globe were looking to expand their operations or relocate to the Phoenix area. The state is attracting companies through its no pro-business legislation, enforced by a no corporate franchise tax policy - as well as access to impressive talent and lower living costs.
Here are the companies heading to Arizona:
So, it begs the question, are cities like San Francisco and New York still considered “superstar” cities? Or is this the downfall of the “greats”? At 3Sixty, we think only time will tell - but if you’re considering relocating your team, it’s worth keeping in mind where the biggest companies are heading.
3Sixty
3Sixty, the business travel industry’s most secure and intuitive accommodation platform, helps employees to book and manage their stay in over one million quality, cost-effective rooms and properties around the world.