Why Are Companies Relocating to Texas? 3 Reasons Why Companies Are Moving to Texas in 2024

Why Are All the Tech Companies Moving to Texas?

Businesses are flocking to the Lone Star State. Over the past few years, Texas has become a hotbed for corporate relocations, attracting major companies from various sectors such as tech, energy, and construction. But what is it that’s luring these businesses to Texas? Join us as we explore the growing trend of companies moving to Texas and unravel the reasons behind this phenomenon.

Short Summary

  • Texas offers numerous attractive benefits for corporate relocations, such as favorable tax policies and a growing tech talent pool.
  • High-profile companies like Oracle, HPE, and Charles Schwab are moving to Texas due to its business climate, low taxes, and skilled workforce.
  • The trend of major companies moving to Texas has been ongoing for years; Texas now has the most Fortune 500 companies of any state.

The Texas Attraction: Key Factors Driving Corporate Relocations

Why Are So Many Companies Moving to Texas?

The allure of Texas as a destination for corporate headquarters is undeniable. With favorable tax policies, affordable living and working costs (including lower housing costs), and a burgeoning tech talent pool, Texas has proven irresistible to businesses seeking greener pastures.

Let’s explore the key factors that make Texas a magnet for companies eager to relocate.

Texas Tax Advantages

One of the most attractive aspects of Texas for businesses is its tax advantages. Compared to states like California, Texas offers more attractive tax rates and, notably, no personal or business income tax. Texas is one of only five states that doesn't have business income taxes, personal income taxes, or sole proprietor fees. This makes the state an appealing option for both companies and their employees, who can enjoy lower costs and higher take-home pay.

The franchise tax rate in Texas is also favorable, with no taxes for businesses earning under $1.23 million and just 0.375% for retail and wholesale companies above the margin, with other types of companies paying 0.75%. Compare this to California, where most businesses pay a rate of 8.84%. No wonder more companies are considering relocating to Texas to reap these financial benefits!

Affordable Living and Working in Texas

Another contributing factor to Texas’ appeal is its affordable living and working conditions. Houses are cheap in Texas, particularly compared to the coasts, and the cost of living in Texas is low compared to the national average. This makes it easier for employees to live close to work and enjoy comfortable lifestyles.

Companies can also benefit from streamlined land acquisition processes and comparatively lower corporate rents, leading to cost savings and a more attractive bottom line.

Tech Talent Pool in Texas

The flourishing tech talent pool in Texas is another reason why tech companies and other corporations are flocking to the state. Austin, in particular, is thriving as a technology innovation hub, leading to its moniker of "Silicon Hills" in direct comparison to Silicon Valley. UT Austin is considered one of the best engineering universities in America, supplying a steady stream of talented graduates to the workforce.

Science-related industries abound in Texas' biggest cities. Dallas-Fort Worth features a robust network of aerospace and information technology companies. Houston is home to the biggest medical complex in the world, fueling bioscience research. This abundance of skilled professionals has made areas like Austin, Houston, and the Dallas-Fort Worth Metroplex a prime consideration for companies looking to relocate.

Texas Economy: A Diverse Landscape

The Texas economy is a force to be reckoned with. The state’s business-friendly environment, highly trained and diverse labor force, and convenient access to global markets have made it a powerhouse on the economic stage. As the second-largest economy by GDP in the United States, following California, Texas is supported by a variety of industries, with energy playing a major role.

But it’s not just the energy sector that’s making waves; other sectors like manufacturing and information technology are also shaping Texas into an economic titan. Let’s take a closer look at these industries.

Energy Sector Dominance

Texas’ dominance in the energy sector is undisputed. With a $172 billion energy sector encompassing natural gas, coal, wind, and oil, the Lone Star State leads the charge in U.S. energy production. Texas has a third of the nation's oil refining capacity and produces over a quarter of the wind power in the United States—wind power actually exceeded coal power in Texas starting in 2020. A full 12% of the net electricity generation in the country comes from Texas.

This sector not only stimulates economic growth but also supports hundreds of thousands of existing jobs.

Manufacturing Industry Boom

Texas is a Major Producer of Semiconductors

Did you know that Texas Instruments invented the first semiconductor integrated circuit, enabling the modern electronics industry? In 2020, this facet of advanced manufacturing contributed $15.3 billion to the Texas GDP and was responsible for a quarter of U.S. semiconductor exports.

Texas has the second-largest manufacturing workforce in America. From automobile manufacturing for Toyota and GM to semiconductors for Samsung and GlobiTech to chemical manufacturing for Fluor and Chevron Phillips, Texas has a versatile skilled workforce for manufacturing on a global scale.

Information Technology and Telecommunications Expansion

Another sector making an impact on the Texas economy is information technology and telecommunications. The Dallas-Fort Worth metro area alone houses giants like AT&T, Telvista, Palo Alto Networks, Texas Instruments, and EPAM Systems. This sector employs a substantial portion of the region’s workforce.

There are more than 17,600 computer and information technology firms in Texas, and tech employees are moving to Texas in record numbers. This expanding industry heavily contributes to job creation and investment in the state, drawing new businesses and boosting the regional economy.

Notable Companies That Moved to Texas

Recent years have seen a surge of high-profile companies relocating their headquarters to Texas. Among the many corporate relocations, several tech giants from Silicon Valley have made the move, signaling a clear trend that’s hard to ignore.

Some of the Fortune 500 companies that have moved their headquarters to Texas in recent years include:

  • NRG Energy - moved from Princeton, New Jersey, to Houston
  • Tesla - moved from Palo Alto, California, to Austin
  • Hewlett Packard Enterprise - moved from San Jose, California, to Spring
  • Oracle - moved from Redwood City, California, to Austin
  • Charles Schwab - moved from San Francisco, California, to Westlake
  • Caterpillar - moved from Deerfield, Illinois, to Irving
  • AECOM - moved from Los Angeles, California, to Dallas
  • CBRE - moved from Los Angeles, California, to Dallas

The list of companies relocating to Texas continues to grow, with businesses like Sonim Technologies, Pabst Brewing Company, and Aeromax Industries also making the move. With the advantages offered by Texas becoming increasingly apparent, it’s no surprise that more and more companies are choosing to call it home.

Texas Cities Benefiting from the Corporate Migration

Dallas Business District: Where Companies Are Moving in Texas

As companies continue to migrate to Texas, Texas' major metros are reaping the rewards. Austin and Dallas-Fort Worth are the primary beneficiaries of this corporate influx, experiencing a surge in economic growth and job opportunities as a result. These cities offer a thriving tech scene and an abundance of resources that make them ideal locations for businesses looking to relocate.

Dallas-Fort Worth has 24 of Texas' 55 Fortune 500 company headquarters, with Houston being home to 26. The Austin metro lays claim to three, and San Antonio has the last two.

As more businesses recognize the advantages of setting up shop in Texas, it’s evident that these cities will continue to prosper and evolve into even more attractive destinations for corporate relocations.

The Future of the Texas Business Boom

Texas has emerged as a prime destination for companies looking to relocate, thanks to its attractive tax policies, affordable living and working costs, and a growing tech talent pool. The state’s diverse economy, driven by diverse, high-paying industries, offers a fertile ground for businesses to thrive and grow.

As more companies recognize the advantages of moving to Texas and seize the opportunities it presents, the future of corporate relocations to the state looks incredibly promising.

Frequently Asked Questions

Why are so many tech companies moving headquarters to Texas?

Many of the tech companies moving to Texas are coming from California's Silicon Valley. Texas is viewed as a more business-friendly climate compared to California, with fewer regulations and lower taxes. Companies can thrive here without facing the same restrictions that are found in California. Additionally, they benefit from lower cost of living, no state income tax, and low real estate prices in Texas vs. California.

The strong economy, lack of corporate income tax, and high-quality infrastructure make it an ideal choice for businesses looking to expand. Additionally, the workforce has seen an increase in highly educated talent, both from native talent and talent from other states, due to the favorable environment for job seekers.

Tech companies moving to Austin also benefit from the growing tech infrastructure as more companies move to the Silicon Hills, including both company headquarters and major offices for companies like Amazon, Facebook, and Google.

Why are so many companies moving to Texas?

As Texas offers an attractive business environment with its low unemployment rate, affordable business costs, favorable tax climate, and plentiful skilled workforce, companies of all kinds are increasingly looking to Texas for potential growth opportunities.

What big companies are moving to Texas?

Several big companies have recently relocated to Texas, including electric vehicle maker Tesla in 2021, design and consultancy giant AECOM in 2021, and commercial real estate brokerage CBRE in 2020.

Additionally, many Fortune 500 and Forbes Top Private companies and industry leaders such as Caterpillar, NRG Energy, HPE, and Oracle have joined in on the action. This trend has been going on for years, with companies like Jacobs, NTT Data, Fluor, Comerica, and Toyota relocating to Texas from across the country. Texas now has the most Fortune 500 companies of any state.

What are the key factors attracting companies to Texas?

Texas is an attractive choice for companies due to its business-friendly environment with low taxes, affordable living and working costs, and a rapidly growing tech talent pool.

Ready to live your best life in Texas? Call The RealFX Group at (512) 956-7390 to contact an experienced local real estate agent who can help you discover the Texas home of your dreams.

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