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Texas Is About To Record Its Worst Year For Headquarters Relocations Since 2017

When Elon Musk announced he would bring his Tesla HQ to Texas, it seemed to cement the state's reputation as the king of corporate relos.

Just a year later, that title is being called into question as the state prepares to log its lowest number of headquarters moves since 2017.

As the year draws to a close, Texas has snagged 19 out-of-state headquarters — less than a third of the 62 recorded in 2021, according to YTexas, a business network for companies relocating, expanding and growing in the state.

Site selection experts agree that last year’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.

Tesla's global HQ in Austin

“It’s getting extremely competitive out there, and other states are getting really aggressive,” YTexas CEO Ed Curtis said, pointing to Florida, North Carolina and Ohio among the state's top HQ rivals. “They’re winning some of these deals.”

Over the past several years, Texas’ low cost of living and business-friendly policies have attracted headquarters relocations in unprecedented numbers. The number spiked in 2021, as stricter coronavirus-curbing policies in other states brought even more business to Texas.

Now, that flurry of activity has fizzled and things are beginning to normalize, JLL Managing Director Torrey Littlejohn said.

“Everyone was in their yoga pants behind a computer in 2020; they were so excited to press go in 2021,” she said. “There is a velocity that’s been going on in this Dallas market for the past 10-12 years that I just don’t think we can maintain forever.”

The year started off strong with several big relocation announcements, including from Illinois-based Caterpillar, which unveiled plans to move its global HQ to Irving in June.

But as a tightening of monetary policy began to take its toll on the corporate world’s bottom line, the number of announcements slowed to a drip. 

Many firms that chose to forgo some or all of their physical space during the pandemic may see an economic downturn as even more reason to delay decisions around whether to return to the office, said Kim Moore, an executive managing director at Newmark and member of the Site Selectors Guild.

“You saw companies really re-evaluate their model and go 100% remote,” she said. “When you downsize your headquarters and cut operational costs, you don’t necessarily need to move to a different location.” 

Other firms may view a recession as an opportune moment to pull the trigger on a relocation decision. The natural attrition that occurs during a move could help companies avoid layoffs, Littlejohn said.

“It wouldn’t be the driver, but I have worked with companies that relocate their headquarters as a way to shift the cost basis in their labor,” Littlejohn said. “You know that a certain percentage is not going to go with you.”

Cost has always been a factor in relocation decisions, but Moore said Texas’ housing affordability and the rising cost of labor are being looked at more closely, especially amid runaway inflation and higher interest rates.

“Texas is no longer the low-cost environment it used to be,” she said. “It’s the issue of being a victim of your own success — when you are really successful, and you get a lot of projects and a lot of wins, you have a lot of competition for talent, and wages start to rise, rents start to rise.” 

The median sales price of a home in Texas increased by 9.7% in the third quarter to $340K, according to Texas A&M University's Texas Real Estate Research Center. Some of the biggest metro areas saw double-digit percentage growth, including Dallas-Fort Worth, San Antonio and Houston, which all notched annual gains of between 11% and 13%.

Apartment costs have followed a similar trend, with DFW seeing an annual increase of 12.5% in October. Rent growth in Houston, Austin and San Antonio was between 8% and 9.5% in the same period, according to

When it comes to cost of living, Littlejohn said, it’s all about perspective. Companies relocating from coastal cities still think of Texas as relatively cheap, and while some markets may compete on price, they lack other benefits that sweeten the deal.

“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.”


Another factor working against Texas is its position on certain political issues, Moore said.

The state’s ban on abortions, for example, will dissuade some female employees from moving to Texas. It could also hinder a company’s ability to hire women once they arrive.

“Companies don’t want to get involved in politics — it’s not really their intention,” Moore said. “They have to hire as many people as they possibly can with the right skill set, and anything that could alienate a specific person, class or group is not beneficial to their recruitment policies.”

Last week, a House Bill was filed by Republican state Rep. James Patterson that would prohibit companies that pay for abortion-related travel costs from receiving tax subsidies, according to Bloomberg. Several companies that operate in Texas, including CitiGroup, Walmart and Apple, have policies in place that help cover these costs.

The state also has legislation on the books that bans municipalities from doing business with banks that have environmental, social and governance policies it deems hostile to fossil fuels and firearms. Five of the nation’s largest underwriters — including JPMorgan Chase, Goldman Sachs, Citigroup, Bank of America and Fidelity — temporarily stepped away from the market in late 2021 when the law was passed, according to Knowledge at Wharton.

These flare-ups fuel the growing sentiment that Texas may not be as business-friendly as it purports to be. At least in the short term, Moore said some companies could see the state as more trouble than it is worth.

“Until the political environment settles or comes a little bit more toward the middle, Texas may be off the list,” she said.

“We saw that in other states that have had similar moves ... and we have certain clients that are like, 'I will never go there. I don't even want to look at it, I don't want to talk about it.'”

For many firms, though, the benefits of Texas’ robust job market, strong population growth and strategic location outweigh its divisive political environment. Curtis suspects a recession may even fuel an uptick in relocations in 2023.

“If there is a slowdown nationwide, it’s going to benefit Texas,” he said. “We’re going to see more interest and more activity in the state because of our pro-business policies, and we’re still better than most cities when it comes to cost of living and our favorable regulatory environment.”

Texas may not see the same number of corporate relocations it did leading up to 2021, but that isn’t necessarily a bad thing, Littlejohn said. The level of activity can’t be sustained forever, she said, and a slowing of activity may allow the state to focus on ensuring the success of firms that are already here.

“It’s still a very healthy market,” Littlejohn said. “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.”