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Guess Who’s Coming to Texas?

If you’re in Austin, or anywhere in Texas, you’re seeing an influx of new businesses. What is the scope of this trend, and how is it affecting the companies that call Texas home? To find out, HT Staffing touched base with economic development experts at the Office of the Governor and the Austin Chamber of Commerce. We also spoke with an Austin-based Realtor and checked in with the local press.

To say Texas enjoys a favorable business climate is an understatement. With its lack of corporate income tax, individual income tax and estate tax along with its predictable regulatory environment, the state is highly employer-friendly. Add to this a strong economy, affordable housing and 300 days of sunshine a year, and it’s no wonder companies and people are migrating to the state in droves.

Texas is one of 10 states in the U.S. where more people are moving in every year than moving out. According to U.S. Census Bureau figures released in December 2011, the Lone Star State’s population grew more than that of any other state between April 2010 and July 2011, gaining at least 529,000 people during that period.

Austin and its environs exemplify the magnetic power of the state in drawing businesses and workers from all over the country—especially from California. Dave Porter, senior vice president of Economic Development for the Greater Austin Chamber of Commerce tells us, “Since 2004, 242 primary employers have moved into the five-city Austin metro area. We see a lot of tech employers, a lot of movement out of California. Companies gain about a 30 percent savings operating a tech firm in Austin compared to California.”

Apple is one California transplant that figures significantly in Austin’s employment scene. One of the city’s largest employers, it will more than double its Texas workforce with the addition of some 3,600 people on its new, $304 million Austin campus. Facebook and eBay/PayPal are also recent Californian transplants on Austin’s employment landscape.

Austin had a 37 percent growth rate from 2000 – 2010, with numbers expected to increase. Porter says, “There is growth across all sectors in Austin, and software touches on all.”

How does all this growth affect local employers? Established employers in Central Texas may feel the pinch of competition for local resources such as talent, office space, and flights in and out of Austin-Bergstrom International Airport. They will also experience the opportunities economic expansion brings.

Talent. Porter says, “Every technology company is facing a shortage of software engineers. After the tech bust, high school students decided not to go into software engineering; enrollment went down. Employers are poaching talent from elsewhere.”

Joyce Stephen, an Austin Realtor with a technical background in aerospace, specializes in helping high-tech companies with relocations through her corporate concierge service. Stephen relates: “I work with a large local gaming company that has to go outside of the state—outside of the country—to find the specialized talent they need. One guy I helped was an artist the company brought in from Brazil.”

She continues, “More companies coming into the state, and Austin in particular, are bringing in more talent—educated talent. Austin feels comfortable to these folks; we’re a young, well-educated community. At a certain point, we reach critical mass. Growth breeds growth.”

From the Office of the Governor’s Economic Development & Tourism Division, we hear from Executive Director Aaron Demerson: “The Governor has done a lot to make sure the public school system is graduating students with the skill levels local employers need. Programs include increased financial aid, increased accessibility to higher education and a call to institute $10,000 degree options.

Office space. The market for leased office space is getting tighter, especially in southwest Austin and downtown. According to a recent article from Austin Business Journal, the market vacancy rate is at 16.4 percent, down from 18.6 percent this time last year. In the Central Business District, the number is at 13 percent.

Space in neighboring Round Rock is at a premium as well. Vacancy rates are reported as having plummeted from nearly 50 percent to 7.76 percent.

Austin residents, as well as those in surrounding communities, can expect to see construction cranes as investors rush to fill the gap in office space. Another Austin Business Journal story says that capital is flowing into Austin’s office real estate market, citing an infusion of about $342 million more in the first half of 2012 than in the entire previous year. The pace is expected to pick up—and to expand to foreign investors—after F1 racing begins this fall.

Texas’ employment picture is rosy, from Samsung’s new semi-conductor chip manufacturing facility in Austin ($2.5 billion capital investment, 900 jobs) to GE Transportation’s new locomotive manufacturing facility in Fort Worth ($96 million capital investment, 775 jobs). Demerson concludes, “People are in flocking from all over the country to get a job, buy a house, start a business. Competition between states is good for everyone; it makes the nation as a whole stronger.”