Both companies and workers are on the move, but they’re not always moving to the same places. Some cities and states have been relocation hotspots for companies. However, rising housing costs are prompting many workers to reconsider living in expensive metro areas. Here’s what’s happening now in corporate relocation trends.
Corporate Headquarter Relocation Trends
A large number of companies have made the decision to move away from California in recent years. According to a report from Hoover Institution, at least 272 companies moved their headquarters out of California between January 1, 2018, and June 30, 2021. Companies may decide to leave California for a range of reasons, including high tax rates, expensive employee lawsuits, high labor costs and difficulty obtaining permits. According to the report, the most popular relocation destinations are Texas, Arizona and Nevada.
According to Commercial Property Executive, five states have become “corporate relocation magnets.” Texas, known for being pro-business, has seen the highest number of corporate relocations since the pandemic began, and Austin in particular has become a popular choice for tech companies. The other relocation hotspots on the list are Florida, Arizona, Georgia and Tennessee.
When companies relocate, they need to pick a city, not just a state. Grey Journal lists five cities that are especially attractive to businesses looking for a new location. Two of these cities – Austin and Houston – are in Texas. The other three cities are Nashville, Tennessee; Atlanta, Georgia; and Phoenix, Arizona.
Big Companies That Have Relocated
Moving might be harder for large, well-established companies, but in recent years, some big-name companies have decided to move their headquarters.
Toward the end of 2020, Oracle announced that it was moving its headquarters from California to Austin, Texas. According to CNET, the company wanted to provide its workers with more flexibility regarding where and how they work, and it would maintain facilities in other states.
In 2021, Tesla also moved its headquarters from California to Austin, Texas. According to Business Insider, Elon Musk, the CEO of Tesla, could save around $2.5 billion in capital gains taxes because of the move.
Worker Relocation Trends
Workers are moving, too, and their relocation plans don’t always coincide with the relocation plans of their employers. The pandemic resulted in a new population of remote workers. According to FlexJobs, 31% of workers said they would consider relocating if they could work remotely permanently – something many workers are keen to do. Common reasons for wanting to relocate include a better quality of life, a lower cost of living and a different climate.
Some people have taken the opportunity to move out of expensive cities. Data from Zillow and the U.S. Census Bureau shows that close to two million renters who couldn’t afford housing in metro areas were able to afford homes father out when remote work meant that they no longer had to worry about the commute.
Housing Costs and Relocation Concerns
Rents have been surging. According to the June 2022 Rent Report, the national average rent for a one-bedroom apartment increased 25.5% over the last year, and the national average rent for a two-bedroom apartment increased 26.8%. Some areas saw even sharper increases, including some of the corporate relocation hotspots. In Texas, average rent increased 30.92%, and in Florida, average rent increased 42.03%.
High housing costs and a lack of housing availability might be a barrier to workers who would otherwise be interested in relocating for the right job. To address this issue, some businesses are providing housing as an employee benefit.
As employers struggle to find workers and workers struggle to find housing, this may be the perfect solution. Temporary housing benefits may be especially practical for seasonal workers who only need to be in town for a few months out of the year, as well as new workers who need a place to stay while they look for permanent housing.
Insuring Your Corporate Relocation
Corporate relocation trends are impacting where businesses and individuals move. However, these moves carry risks. Whether you’re moving your entire company or offering a relocation package to job candidates from other areas, it’s important to have the right insurance coverage. We offer corporate relocation insurance for corporations that are moving, moving companies that handle corporate relocations and relocation management companies. We also provide vacant dwelling insurance and FLEX-Stay insurance for temporary housing. Learn more.