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Digital Realty Joins S.F. Tech Exodus And Heads For Texas

Austin, Texas

Another San Francisco-based firm is packing up and heading to Texas. 

Global data center company Digital Realty announced Thursday it will relocate its S.F. headquarters to Austin, Texas. The move follows a recent flight from the Bay Area by Oracle, which is transferring its headquarters from Redwood City to Austin. Hewlett Packard is shifting its home base from San Jose to Houston. 

Migration of workers and companies from pricey coastal cities to less expensive inland cities has been steady for years but appears to have accelerated as the coronavirus pandemic has forced employees to work remotely. San Francisco, one of the nation’s most expensive rental markets, has borne the brunt of the exodus.

San Francisco’s office market is in a pandemic-induced free-fall, according to CBRE's Q4 2020 data. The firm’s report shows S.F. office vacancy rates up by 16.9% from the previous quarter while direct asking office rental rates dropped by 5.2% over the same time period. While the report noted some increased optimism due to vaccines' rollout, possibly allowing office reopening later this year, it hasn’t stopped companies like Digital Realty from betting on other markets.

"The central location, affordable cost of living, highly educated workforce and supportive business climate have helped make Texas an epicenter for business activity and technology growth," Digital Realty CEO A. William Stein said. "As we continue to make strategic investments to best position Digital Realty for long-term growth, we are confident our expansion in Texas will help us meet the needs of our more than 4,000 global customers, while continuing to deliver value for our stakeholders, employees and the communities we serve around the world."  

Workers are also being lured by the larger, cheaper accommodations found in cities like Austin. That city is the top pick for former San Franciscans, followed by Seattle, New York and Chicago, The New York Times reported, citing data from moveBuddha. 

Digital Realty said it would continue to hold square footage in the Bay Area with several data centers in Oakland, San Francisco and Silicon Valley. At the same time, the company said it expects the new Texas headquarters will aid in serving the global customer base. The company first entered Texas in 2002, acquiring 2323 Bryan St. in Dallas, and now has 30 data centers along with 20% of its North American employees in the state, according to the press release.