When a significant company decides to move or establish a new headquarters in a city with promising growth prospects, it sets off a domino effect that impacts every aspect of the local economy. The creation of new jobs and the rise in wages drive population increases, lower unemployment rates, enhance tax revenues, and attract additional investments. Moreover, new suppliers may follow the relocating company, introducing new resources, and local businesses often expand to accommodate the heightened demand from the growing population.
These economic changes improve the overall quality of life in the city, making it a more appealing place for new residents. This increased attractiveness boosts the demand for housing, creating a cycle of growth and development. This phenomenon is what transformed San Francisco from its pre-tech boom state into the bustling metropolis it is today.
Investors are quick to identify the economic advantages of corporate relocations, often resulting in immediate effects on the real estate market. Property values tend to rise even before the company completes its move. For instance, when Amazon established its headquarters in Seattle in 2010, rental prices surged to more than double the national average over the subsequent seven years. Similarly, when Amazon announced in 2018 that its HQ2 would be in Arlington County, Virginia, home prices began escalating rapidly before the company fully relocated.
For real estate investors, the key to capitalizing on a corporate headquarters move lies in anticipating the change ahead of time. Without insider information or foresight, the best strategy is to analyze relocation patterns, understand the factors driving companies to move, and focus on cities with strong business potential. Essentially, it involves adopting the mindset of a Fortune 500 CEO.
Recent trends over the last five years have shed light on the reasons behind corporate relocations. Out of 465 relocations between 2018 and 2023, 110 were motivated by the pursuit of lower taxes and a more business-friendly environment, according to commercial real estate firm CBRE. This was particularly true for manufacturing companies, which also sought to optimize their portfolios or consolidate operations.
In contrast, the tech sector, known for its flexibility, was primarily driven by the need for more affordable talent. Cities that offer a robust pool of tech professionals at lower living and wage costs are especially attractive to these companies. Tax reductions and an improved business climate were secondary factors influencing tech companies’ moves.
Meanwhile, retail businesses aimed to be closer to their customer base, and financial services firms were drawn to areas with larger labor pools. Industries with low relocation rates typically remain in place to stay close to their customers and for other specific reasons.
During the five-year period analyzed by CBRE, the sectors with the highest number of corporate moves included:
Technology (135)
Manufacturing (120)
Financial Services (34)
Retail (33)
Healthcare (21)
Although CBRE's research indicated a decrease in publicly announced corporate relocations in 2023, an analysis by HireAHelper of SEC data revealed that relocations peaked in the 2022-2023 fiscal year, with nearly one in twelve companies moving their headquarters. Additionally, a HireAHelper survey found that most employees were willing to move with their employers, with 44.6% even open to relocating out of state.
Companies Relocating to Florida, Texas, and Other States
From 2018 to 2023, Texas and Florida emerged as the top destinations for Fortune 500 companies relocating their headquarters. Data from CBRE and HireAHelper shows that businesses of all sizes are increasingly choosing these states, which also rank highly in the Tax Foundation’s State Business Tax Climate Index for 2024.
Texas offers a low franchise tax rate, and residents benefit from exemptions on both business and personal state income taxes. Corporate rental and housing costs are generally much more affordable compared to coastal urban centers.
In Florida, there is no individual income tax and a low corporate tax rate. State initiatives aimed at promoting investment are expected to create 200,000 new high-paying jobs by 2030. In 2023, Florida experienced the highest rate of net inbound corporate headquarters relocations.
Both states have also seen significant population growth, driven by remote workers seeking a lower cost of living and bringing with them a well-educated workforce from states like New York and California.
Notable Cities for Corporate Relocations Include:
Austin, Texas: This expanding tech hub attracted 66 headquarters over five years, and Elon Musk recently announced that X headquarters would relocate to Austin. Although housing prices in Austin have decreased since the pandemic, the city remains highly regarded and is listed by U.S. News as one of the best places to find a job.
Dallas: Between 2018 and 2023, Dallas welcomed 32 headquarters and experienced the highest population growth in 2023, adding over 150,000 new residents. SEC data shows a 50% net increase in corporate headquarters for 2022-2023. Frontier Communications recently moved to Dallas, projecting a $3.8 billion boost to the state’s economy and 3,000 new jobs over the next decade.
Houston: Chevron has recently moved its headquarters to Houston, a city that has added 25 headquarters in the past five years. Unlike Austin, Houston’s housing prices remain below the national median and continue to rise, according to Redfin.
Nashville: Renowned for its thriving healthcare sector, Nashville saw 21 headquarters relocations from 2018 to 2023. SEC data indicated a 40% increase in corporate headquarters between 2022-2023. Oracle is among the firms planning to move its headquarters to Nashville.
Jacksonville, Florida: While Miami, Tampa, and Orlando have attracted companies from coastal states, Jacksonville experienced the highest growth among Florida cities during the 2022-2023 fiscal year, with a 66.7% net increase in corporate headquarters. Dun & Bradstreet relocated there this year.
Denver: Denver has faced high housing demand and rapidly rising prices in recent years but remains more affordable than San Francisco and New York. Several healthcare and utility companies, including Virta Health and Redaptive, have moved there. CBRE recorded 11 corporate relocations in Denver over the five-year period.
Atlanta: Three Fortune 500 companies have relocated their headquarters to Georgia in recent years. Georgia offers favorable corporate taxes, and companies like Hai Robotics and Blaze Pizza have recently moved to Atlanta. The housing market in Atlanta is booming, with a 14.7% year-over-year price increase, yet remains affordable according to Redfin.
Waltham, Massachusetts: Set to welcome Welch’s headquarters in 2025, Waltham was the fastest-growing city for new corporate headquarters in 2022-2023, with a 175% net increase, according to SEC analysis. The median home sale price in the city rose by 19% year-over-year.
Companies Departing New York, California, and Chicago
It is unsurprising that companies are moving away from states with high living costs and burdensome business taxes, such as California and New York. CBRE reports that California, New Jersey, New York, and Illinois lost the most Fortune 500 headquarters during the analyzed period. The cities with the largest drops in corporate headquarters include:
San Francisco/San Jose (79)
Los Angeles/Irvine (50)
New York City (21)
San Diego (11)
Chicago (10)
SEC data from 2022-2023 also revealed significant losses in corporate headquarters in Cambridge, Massachusetts, and Seattle.
Emerging Markets to Consider
While the shift towards Texas and Florida continues, presenting profitable opportunities for investors, it is also beneficial to explore cities with future potential for economic growth and corporate relocations, such as:
Ann Arbor, Michigan: As a college town ranked the seventh most educated city by SmartAsset, Ann Arbor boasts a diverse talent pool that is attracting corporate relocations. Michigan is ranked 11th in the Tax Foundation’s business-friendly climate, and U.S. News lists Ann Arbor as the eighth-best city for job opportunities and the 19th best place to live in the country. Housing prices have steadily increased but remain slightly above the national median, and the city enjoys a relatively high median income.
Provo, Utah: Earlier this year, Qualtrics founder Ryan Smith announced that Provo would host a new tech incubator. The city’s booming economy earned it the title of “fastest growing city” in a Checkr analysis last year. The Tax Foundation ranks Utah eighth for its business tax climate, and Provo is home to Brigham Young University, a leading institution for information technology. In January, JLL announced Modere’s relocation to Provo. Home prices in Provo are in line with the national median.
Final Thoughts
These examples highlight cities in business-friendly states that are set for continued growth. When evaluating new markets, adopting a CEO’s mindset—looking for areas with low tax rates, a highly educated workforce, affordable housing and living costs, and a vibrant culture that attracts both employees and customers—can be highly advantageous. Such cities have the potential to become the next major economic hubs, much like San Francisco did following the tech boom.
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