By the BF Staff
From the July/August 2019 Issue
Corporate relocations have a huge impact on the people who work for the company that is moving its headquarters. Making the decision to relocate can pose numerous challenges and issues that must be resolved.
A company’s location is an important part of a company’s identity and can play a role in the perception of its customers and investors. For the location that is losing a corporate HQ, the company may have been an integral part in helping grow an emerging cluster and relocating could impact continued cluster success.
Conversely, if a company is in need of repositioning or rebranding, a corporate headquarters move could be just the thing to help the business chart a new future.
Strategic issues generally are the drivers of analysis leading to relocation. Singular issues, or a combination of many, may be at play. These could include the need to reduce short- and long-term operating costs or selling real estate assets to raise needed capital to deploy in higher priority ways or it’s a need for expansion capacity and/or the ability to enhance hiring opportunities of a changing workforce.
The locations that have been successful in attracting corporate headquarters have responded to these needs. Here are two that have passed this test and become a magnet for HQs.
IRVING-LAS COLINAS, TX: HEADQUARTERS OF HEADQUARTERS
How does a mid-sized city, wedged between Dallas and Fort Worth earn the title Headquarters of Headquarters in Texas? Start with location, location, location, and add amenities, business-friendly local government, access to a skilled workforce in one of the most diverse residential communities in the country, and you’ve created a vibrant, thriving multi-national business environment.
Irving, TX and Las Colinas, the City’s 12,000-acre masterpiece of a master-planned urban center, is located in the heart of North Texas, immediately adjacent to Dallas-Fort Worth International Airport (DFW) and 10 minutes to Dallas Love Field (DAL). The City intersects with highways 183, 114, 635 and President George Bush Turnpike, four of the most important thoroughfares in North Texas. This central location, highway infrastructure and the Dallas Area Rapid Transit (DART) system gives employers access to a population of 3.3 million skilled workers within a 30-minute commute. Location is just one of the reasons this city with a population of 240,000 has 8,500 small, midsized and enterprise companies, seven Fortune 500 and five Fortune 1000 headquarters, making it home to more corporate headquarters per capita than any other city in Texas.
Foreign Direct Investment (FDI) has also been an important economic development strategy for Irving-Las Colinas. The federal government’s EB-5 program was established in 2012 to attract foreign direct investment by providing a low-cost finance option for the development of corporate, private and public infrastructure projects. The program allows foreign investors the opportunity for residency in the U.S. when they invest in selected projects that meet development and employment creation criteria. Today Irving-Las Colinas has about 150 multi-national, foreign-based companies (49 are Japanese companies like Mitsubishi, Honda, Canon, NEC Corporation of America, Nissan, TrendMicro, Oki Data, Toshiba and others).
Population diversity is another reason Irving-Las Colinas has attracted so many foreign companies. Irving-Las Colinas is the 14th Most Diverse City in the U.S. with the 11th Most Diverse Zip Code (75038) in Texas and the 132nd Most Diverse Zip Code in the country.
Irving-Las Colinas also has a young workforce. The median age in Irving-Las Colinas is 32, which is 6 percent lower than the Texas average, 53 percent of the City’s residents are married, 44 percent speak English, 7 percent speak Spanish as a first language and a remarkable 35 percent of the City’s population are foreign born. More than 90 languages are spoken at Irving-Las Colinas schools.
But, it takes a complete package of amenities to attract major corporations, recruit and retain workforce talent, especially with the city’s low 2.7 percent unemployment rate (April 2019). Visionary city leaders responded by planning and building a 250,000-square-foot entertainment and dining complex around beautiful 125-acre Lake Carolyn. The site has an 8,000 seat Toyota Music Factory indoor/outdoor amphitheater and a 50,000-square-foot outdoor event plaza. This new center for office, retail and entertainment has attracted additional housing options that are a magnet for millennial and executive workers who are looking for a convenient live, work, play, walk and visit community.
Lifestyle is important to employers and their employees. With 56 beautiful lakes throughout Irving-Las Colinas, parks, jogging trails, museums, colleges, hospitals, award-winning golf courses, cultural and recreational institutions, a vibrant convention center and a new convention center hotel, Irving-Las Colinas is an oasis in the heart of a major metropolitan area. Irving-Las Colinas features a unique system of Venetian-styled canals that flank one side of Lake Carolyn with walking paths that meander around offices, shops and residential areas.
Irving-Las Colinas is admired for its model Transit Oriented Developments (TOD). TODs are an exciting, fast growing trend in creating vibrant, livable, sustainable communities. TODs are compact, walkable, pedestrian-oriented, mixed-use communities centered adjacent to high quality commuter train systems. This type of community greatly reduces the need for driving and energy consumption by up to 85 percent, making it possible to live a lower-stress life without complete dependence on a car for mobility.
Irving-Las Colinas’ Hidden Ridge development is a model TOD mixed-use development. This 150-acre, $1 billion campus is home to Pioneer Natural Resources’ 1.1 million sq. ft. corporate headquarters and Verizon’s first 5G TOD development. The City has been a priority target for all major wireless providers, and installations are underway that will make the transmission of data and information up to 100 times faster. The Hidden Ridge development also includes a 3 million-square-foot multi-tenant office complex, multi-family housing, hotels and multiple innovative retail opportunities. Hidden Ridge has a new DART station, parks and trails, all within walking distance of Lake Carolyn with paddle boarding, water taxis, gondolas, dozens of restaurants and entertainment venues.
Also along Lake Carolyn’s waterfront is the popular, mixed-use $100 million Water Street development with more than 1,900 multi-family units completed or under construction, and 60,000 square feet of cafes, wine bars and other retail destinations.
In addition to the highly desirable lifestyle amenities, beautiful single family and multi-family housing, modern infrastructure, central location, high performing public schools and higher education opportunities, and one of the lowest tax rates among cities of a similar size are just some of the reasons for Irving-Las Colinas’ population growth, particularly among millennials and executives.
Find out more why corporations from around the world are making Irving-Las Colinas their corporate home by contacting Kyle Touchstone, VP of Economic Development, Irving EDP Partnership, at [email protected]
GREATER RICHMOND: TOP QUALITY OF LIFE
Technological advances in communication and information technology provide businesses with nearly limitless choices when siting their corporate headquarters. Companies now choose to locate headquarters where traffic is light, school systems are strong, the climate is comfortable and legislation is supportive of business. The Richmond, VA region boasts a unique blend of business-friendly regulations; an affordable, high-quality lifestyle for workers; and first-class executive amenities, making it an ideal corporate headquarters location.
“The Richmond, VA region is a proven location with 10 Fortune 1000 companies headquartered here—plus more with major divisional headquarters—so companies looking for a lower cost location don’t have to worry about sacrificing quality talent,” said Jennifer Wakefield, Interim President and CEO, and Senior Vice President of Marketing of the Greater Richmond Partnership.
One of the biggest assets is the region’s diverse blend of corporate headquarters—there isn’t one industry that dominates the capital of Virginia. Finance, insurance, manufacturing and wholesalers all intermingle, offering an interdisciplinary education for expanding firms.
Several companies have identified the Richmond Region’s proximity to the nation’s capital to be both convenient and cost-saving. Both CoStar and ICMA-RC searched for extensions of their Washington, D.C. offices and located divisional headquarters in the area.
“After reviewing the results of our extensive search, it became clear that the city of Richmond met our needs of a low cost, high quality business environment, as well as a location close enough for our home office to continue a productive work flow,” said Bob Schultze, President and CEO of ICMA-RC, a financial services corporation.
Greater Richmond, VA finds itself at the crossroads of population on the Eastern Seaboard. Whereas the region can deliver goods to 45 percent of the U.S. population due to the dense Northeast corridor, U.S. Census bureau projections have indicated a future increase in the South. A little more than a decade from now, and Richmond will be the best of both worlds—right in the middle of Interstate 95’s service route to northern and southern markets.
According to the Tax Foundation, Virginia ranked 10th in the nation for corporate tax and sales tax component of the State Business Tax Climate. In 2017, Virginia had the lowest sales tax per capita at $469, out of 45 states and the District of Columbia. Data shows that the Virginia market is stable and experiencing economic growth while displaying that the state is heading in the right direction.
Add Virginia’s 6 percent corporate income tax rate—which is unchanged since 1972—and the state becomes an attractive place for companies to establish their business.
Last year, the Greater Richmond Partnership commissioned Wadley Donovan Gutshaw Consulting (WDGC) Group, one of the nation’s top site location consultant firms, to analyze how the region stacks up against peer competitors for the suitability of a “middle office” operation.
The concept of the Middle Office—long a term to describe value-add and mission critical activities in the investment banking world—described in broader industry terms, is a platform of corporate activities which share some or many of the following functional and talent pool characteristics. Essentially, these represent activities that typically do not require anchoring to corporate headquarters (often in high-cost metro areas) yet are not back-office utilities that tend to be off-shored or outsourced. Middle Office operations typically represent the bulk of knowledge workers within a corporate enterprise. The data showed that the Richmond Region bested peer cities east of the Mississippi including Charlotte, NC; Columbus, OH; Jacksonville, FL; and Nashville, TN.
“We analyzed locational drivers of taking ‘middle office’ jobs—those which are not executive nor entry level positions—in specialties like mid-level management, legal, marketing and creative, financial and accounting, human resources and high-end sales and looked at markets that could be suitable,” said Dennis Donovan, Principal of WDGC. “Based on our findings, the Richmond Region is a very favorable location for middle office which could save a Manhattan- or Washington, D.C.-based headquarters 15-20 percent annually.”
Employees are finding the Richmond Region an easy choice for relocating their families. Cost of living in Richmond is 7 percent lower than the national average and as a state capital, Greater Richmond offers many amenities not afforded by similar-sized cities: the esteemed Virginia Museum of Fine Arts, the Library of Virginia, the Thomas Jefferson-designed State Capitol, along with numerous other historic landmarks.
Buck Stinson, Senior Vice President of U.S. Card Partnerships of CapitalOne, the region’s largest private employer, agrees: “Our employees enjoy living in Richmond for its unique quality of life featuring endless opportunities for outdoor enthusiasts, vibrant fine arts scene, critically-acclaimed restaurants and historic attractions dating back 400 years.”
Vineyards, hiking, skiing and the beach are all within two hours of Greater Richmond, providing endless options for an adventurous quality of life. The James River runs directly through the city, offering the only class IV white-water rapids in an urban environment.
Andrew Florance, Founder/CEO of CoStar, summed up the Richmond region in his decision to locate the real estate firm’s Research Headquarters, “This is an opportunity that allows us to expand our research and software development capabilities in a city that provides a highly-educated labor pool, a superior quality of life for our employees and a culture that aligns to our business model.”
For workers within the GRP represented communities of the City of Richmond and counties of Chesterfield, Hanover and Henrico, the daily commute averages 25 minutes.