Last week, Dutch Brothers Coffee announced it would be moving its headquarters to Tempe, Arizona, after insisting for the last year and a half that it would maintain its headquarters in its hometown of Grants Pass, Oregon. The company initially moved 40% of its corporate roles to the Phoenix area earlier this year after leasing a 136,426 square foot office building, but said that it would be relocating even more roles, as “Bringing more people together will allow us to better serve our customers and crews across the country.” The coffee company isn’t the only company uprooting its headquarters recently.
CBRE has been tracking headquarters relocation announcements since 2018 and added 96 new corporate relocations to its list last year. The firm recently released an updated report on what companies are moving and the drivers behind these corporate decisions.
Why move headquarters?
There are plenty of reasons a company may choose to relocate its headquarters, such as finding office space that better suits the company’s current and future needs. For the 32% of companies that moved their headquarters within the same metro area or state last year, the CBRE report found that most justified the move for similar reasons. Many of the companies had either a growth in headcount and revenue or found office space that was better suited for hybrid work.
Another common reason cited by companies was the strategic decision to be closer to their current or future consumer base and the potential for growth in their new location. This is especially true for international companies looking to invest further in the U.S. market. Last year, international companies made up 25% of headquarters relocations in the CBRE report.
Business climate was cited as the number one reason for relocation, not only last year, but every year the CBRE report has been updated. A better business climate could mean lower taxes or government business incentives that encourage corporations to plant roots in their cities. And some cities have been working overtime to recruit companies to their neighborhoods.
Where are they going?
By far, the most common destination for headquarters relocations is Texas. Texas has marketed itself as the “best state for business” by offering businesses “the freedom to be successful and for their employees to be successful.” The state has no personal or corporate state income tax and boasts of a “reasonable” regulatory climate. According to Forbes, which looks at a variety of factors impacting businesses, Texas ranks as the second-best state for businesses in the country, with North Carolina taking the top spot.
The state of Texas also offers a plethora of various business incentives to “companies who are creating jobs and driving innovation in Texas,” and the state’s website doesn’t even include the local incentive programs offered by individual cities. The most popular destination, Dallas, has its own Economic Development Incentive Policy to help attract, retain, and support businesses, as do other top Texas city destinations, including Austin and Houston.
Many of those new headquarters were previously in California, where taxes, salary expectations, and real estate costs are higher. The biggest companies to make the switch from California to Texas in the last few years include Chevron, Tesla, Oracle, Hewlett-Packard, and (funny enough) CBRE.
Will it last?
Although cities have gone to great lengths to get companies to invest in their communities, some are finding that even when companies make the move, it isn’t always easy to get them to stay. For example, Oracle moved its headquarters to Austin in 2020, but in 2024, its CEO announced that it is already planning to relocate its headquarters to Nashville, Tennessee, to be closer to the health care industry. What the CEO didn’t say was that the company is receiving about $250 million in tax breaks to make the move, part of which was approved by the state in 2021, meaning the company never stopped considering its other options.
