Texas remains on top for corporate relocations, although the competition is tighter, and corporate relocations, in general, have slowed since the rush of 2021. This past year, Texas broke past New York to become the state with the most Fortune 500 companies. Texas also rose to become the ninth-largest economy in the world according to Gross Domestic Product (GDP).
But how have economic fears and other factors affected corporate relocations? And what’s ahead? Let’s take a look.
Are We in a Lull?
Relatively speaking, it hasn’t been a great 12 months for corporate relocations to Texas. While the Lone Star state remains the national leader for Fortune 500 headquarters, it picked up fewer new businesses in 2022 than it has in the past five years, reports CoStar News.
To be fair, it’s tough to beat 2021, which saw more than 60 corporate relocations (see our coverage here). Highlights were the opening of the Tesla gigafactory and Oracle’s big move, both settling in the Austin area. In contrast, YTexas logged 24 relocations to Texas in 2022. What happened?
“Site selection experts agree that [2021’s] spike was an anomaly. But since then, several trends have coalesced to blunt the state’s competitive edge, including rising costs, its position on hot-button political issues, a weakening demand for office space, and a general hesitation among companies to move their headquarters ahead of a potential recession,” reports Bisnow Dallas-Fort Worth.
There are some historic wins regarding Texas relocations in 2022. Caterpillar announced its global headquarters move from Illinois to Irving, Texas, adding to the Dallas area’s status as the top metro area for Fortune 500 headquarters.
And then there’s Samsung, currently building a $17 billion semiconductor manufacturing plant just outside of Austin in Taylor, Texas. The HT Group is the lead recruiting agency for Samsung E&C America, the construction and engineering arm of the brand. A variety of commercial construction and engineering jobs are still being filled for the state-of-the-art project.
JLL Managing Director Torrey Littlejohn tells Bisnow that Texas isn’t in trouble because it remains a popular destination for workers and families. “There are other cities with a lower cost of living, but you’d have a harder time finding the labor in those cities,” she said. “You’d have a harder time finding the same job growth and population growth needed to feed those companies.”
She adds another perspective: the calm after the 2021 frenzy could be just what current Texas businesses need. “It’s still a very healthy market. Maybe because we don’t have such a velocity of [relocations], we will do an even greater job integrating those companies and those people into our community as they come,” she says, adding that a slowing of activity may allow the state to also focus on ensuring the success of firms that are already here.
Our Favorite Corporate Relocations to Watch
So now that we have a moment to breathe, what does the near future hold for corporate relocations to Texas? There are still too many projects to mention here. For a running list, check out Texas Economic Development’s website. YTexas also has a Relo Tracker Report that it updates regularly.
Let’s talk about some of projects that we’re most excited about:
Since the Samsung facility is still be built, it remains the top of the list for exciting Austin-area expansions. It’s not a corporate relocation since headquarters remain in South Korea (with U.S. HQs in New Jersey), and Samsung Austin Semiconductor has already had a large presence here for decades. But with talk of the new semiconductor fabrication plant being just the tip of the iceberg—there are potential plans for Samsung to invest close to $200 billion in the area by 2034—it’s a really, really big deal. And with Samsung, Tesla, NXP Semiconductors, and Applied Materials Inc. all holding court in and around Austin now, there’s good reason to believe additional tech- and auto-related manufacturing relocations are imminent.
In other Central Texas news, Austin Business Journal singles out Israeli cybersecurity startup Portnox, which opened its global headquarters here recently, and beverage development and flavoring company Sovereign Flavors, which moved to the small city of Kyle from Santa Ana, California. We are, however, keeping an eye on how the loss of Chapter 313 for counties surrounding Austin might affect corporate relocations. The program offered giant school district tax breaks, which is said to have sealed the deal for Tesla and Samsung.
Setting our sights further down I-35 to the Alamo City, we love all the news coming out of Port San Antonio, the innovation hub centered at the old Kelly Air Force Base. Remember the DeLorean from Back to the Future? What do you think about the DeLorean Motor Company moving its headquarters to Port SA? We can confirm that the vehicles will be electric, but no word yet on their time-travel capabilities.
North Texas remains a Fortune 500 magnet with news just last week that cybersecurity company McAffee has decided to move its headquarters from San Jose, California, to Frisco. “Our decision to choose Frisco for our regional HQ was…based on the diverse cultural destination the city has become, and the many opportunities our team members will have to be immersed in the community and to give back to the many non-profit organizations here,” says Benni Bueckert, a McAfee vice president.
The big news out of Southeast Texas is the $8.5 billion integrated polymers facility (which will produce polyethylene) planned for Orange, Texas. The plant will be built by Golden Triangle Polymers Company LLC, a joint venture between Chevron Phillips Chemical and QatarEnergy. It’s expected to begin operations in 2026 and create more than 500 full-time jobs. But, just like the Samsung project near Austin, construction jobs come first: a whopping 4,500+ construction roles may need filling for the plant to be built.
“It is really exciting for the community and the growth it is going to bring to the county,” says Orange County Judge John Gothia. “The impact is going to be far-reaching…You need more restaurants, more retail, more homes and everything that it takes to support [thousands of] extra people in your community. It drives a lot of growth for us that we have been waiting for a long time to get here.”
Chevron Phillips Chemical President and CEO Bruce Chinn adds to that sentiment, saying, “This facility will contribute to the social and economic fabric of the entire Golden Triangle region of Texas, bringing in thousands of high-paying American jobs and billions of dollars in economic impact. We care deeply about the community of Orange, and we’re thrilled to be bringing jobs and resources to the region with safety and environmental performance at the forefront, as always.”
Our clients and workers know we love Orange, Texas, and the surrounding area, too, so we couldn’t be happier about the news. While we may be experiencing a slowing of corporate relocations from the frenzy of recent years, we’ll hang our hats on quality over quantity with the caliber of projects transforming communities large and small throughout Texas.