By the BF Staff
From the July/August 2021 Issue
Company 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 headquarters, 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 a need for expansion capacity and/or the ability to enhance hiring opportunities of a changing workforce. And then there’s the “millennial” factor: increasingly, people entering the workforce want to work where they want to live, and for a lot of millennials that’s a 24/7 location, like the ultra-hip Deep Ellum neighborhood that Uber selected for its new U.S. administrative hub (okay, technically not an HQ, but you get the point).
Locations that have been successful in attracting corporate HQ have responded to these needs. Here are three HQ magnets that have passed this test.
VIRGINIA: AMERICA’S CORPORATE HOME TOWN
The last few decades have solidified Virginia’s position as America’s hometown for corporate headquarters. In total, 580 companies have relocated to or expanded headquarters offices in Virginia in the last decade. The Commonwealth is home to 22 Fortune 500 headquarters and 39 Fortune 1000 companies—tied for seventh in the country—representing industries as diverse as technology, defense, hospitality, food and beverage and finance.
Virginia is home to almost a million professionals in corporate headquarters functions (e.g., finance, accounting, computer science, data science, human resources and marketing), and that talent pool is one of the most diverse in the country, placing Virginia among the top 10 states for the percentage of corporate professionals who are Black, Asian-American or foreign-born. The Commonwealth maintains an ongoing commitment to diversity and inclusion—for example, Virginia was the first state in the Southeast to extend workplace protections to LGBTQ+ professionals.
Companies are taking notice, including some of the world’s largest. Holly Sullivan, head of worldwide economic development at Amazon, cited “a strong local and regional talent base” when the company announced its decision to locate its highly coveted HQ2 at National Landing in Northern Virginia.
Virginia’s talent advantages start with its top-notch education system, and the Commonwealth invests to ensure the future health of that talent base. Virginia boasts the best higher education system in the country (SmartAsset, 2021) and the best K-12 public schools in the South and the fourth-best in the country (WalletHub, 2019), which helps ensure the future health of that talent base. The Commonwealth holds another talent advantage over its peer states—a robust pipeline of individuals each year, exhibiting stability, confidentiality and high-stakes operational knowledge. Only California, nearly five times larger, has more service members separating from the military each year. Virginia’s location at the center of the East Coast offers headquarters proximity to key economic hubs, including critical customer markets like the federal government, Northeast Corridor and Southeast metro areas. These advantages were cited by then-Northrop Grumman CEO Wes Bush when the Fortune 100 company moved its headquarters from California to Falls Church in Northern Virginia—and Virginia’s proximity to Washington, D.C., allows for access to regulators and other decision-makers. Strong infrastructure helps magnify those geographical advantages. As Hilton President and CEO Chris Nassetta said when his Fortune 500 company announced it was relocating its headquarters from California to Fairfax County, “Virginia offers a more central location from which to operate a global organization.”
In addition to Virginia’s highway network, second-densest in the Southeast, every region of the Commonwealth has access to at least one of 16 commercial airports, including two of the nation’s top airports in Ronald Reagan Washington National Airport and Washington Dulles International Airport. Virginia’s extensive public transit network offers access to environmentally friendly transportation options—the Commonwealth ranks No. 1 among Southeastern states for public transit usage.
Another Virginia trait attractive to corporate headquarters is stability. The Commonwealth offers a combination of business-friendly policies and stable operating costs, including a 6 percent corporate income tax rate that hasn’t changed since 1972. Virginia has earned an AAA bond rating for more than 80 consecutive years, longer than any other state. As Mike Petters, president and CEO of Newport News-based Fortune 500 company Huntington Ingalls Industries, said, “There’s a general consensus in the state legislature of the importance of business, and I don’t think that is tied to a particular party. It’s incumbent upon the businesses to identify those things that are good for business, but when the case is made, the Commonwealth steps up.”
Major corporations have found Virginia to be a strategic location to build and grow, supported by an educated workforce, strong transportation, strategic location, demographic diversity and a host of other benefits. State and local leaders have worked assiduously to help businesses build on the Virginia success story.
IRVING-LAS COLINAS: WHERE COMPANIES CAN HAVE IT ALL
For companies searching for a home where they can have it all, look no further than Irving-Las Colinas. Centrally located in the Dallas-Fort Worth Metroplex, Irving-Las Colinas is known as the “Headquarters of Headquarters” with more Fortune 1000 global headquarters per capita than any other city with a population of more than 2,000 in Texas—and all for good reason.
Whether companies are looking for high-quality housing and lifestyle options for their teams, an educated and diverse talent pool, a central location with global access within 10 minutes or business-friendly incentives, Irving-Las Colinas has it all.
“Our people like Texas, and Las Colinas is attractive for them because we travel so much, so being close to DFW is a great option,” said Alvaro Luque, president and CEO of Avocados from Mexico, which is headquartered in Irving-Las Colinas. “Also, with all the options that you have in restaurants and entertainment, you can find everything that you need here in the city, and that’s a great advantage for anyone that wants to live or work here in Irving, Las Colinas.” This year, Avocados from Mexico was recognized as one of Fast Company’s “World’s 50 Most Innovative Companies.”
Irving-Las Colinas offers employers the opportunity to provide their teams at-work flexibility that few cities in the region can—the time-honoring lifestyle known as the “10-Minute Life.” The phrase describes an idyllic lifestyle where all the necessities and amenities of life are literally within a 10-minute transit timespan. One can travel to the office or the store, dine at eclectic and diverse restaurants, reach miles of hiking and biking trails, pick up students from school, go to a live concert or get to two major airports—all within 10 minutes. Access to this way of life helps companies in Irving-Las Colinas move beyond the standard benefits and offer employees an array of work-life balance amenities, all within easy reach.
Earlier this year, CHRISTUS Health, an international Catholic, faith-based health system with more than 600 facilities, announced that it would relocate and expand its headquarters within Irving with the construction of a 400,000+-square-foot building. The new location will be within walking distance of more than 20 restaurants, several hotels, the city’s newest entertainment venue, the Toyota Music Factory, and multiple lifestyle housing options. State Bank of Texas also recently announced the relocation of its headquarters to Irving-Las Colinas, and will develop a 47,000-square-foot building adjacent to the CHRISTUS property.
“Irving, the chamber and the economic development partnership have been very supportive,” said Ernie Sadau, CEO of CHRISTUS. “They took a leap of faith on us nine years ago and they’re working with us again to stay in the area. When we see that and the quality of life that this area can provide, it makes us believe that we’ve made the right decision.”
In addition, the Irving-Las Colinas Economic Development Partnership team fosters a customer-first culture, guiding companies considering a relocation or expansion. From ensuring that plans meet building codes and troubleshooting potential obstacles before they occur, to coordinating development meetings and assisting with a seamless transition experience for relocating employees, the team is a true partner throughout the process.
The Irving-Las Colinas team also offers relocating and expanding companies access to a wealth of local and state incentive opportunities, from tax abatements to grant programs. Irving-Las Colinas also offers companies access to its two Tax Increment Finance Districts (TIFs) and three Public Improvement Districts (PIDs) that can help reimburse various infrastructure costs.
As a business-friendly state, the Texas Enterprise Fund (TEF) is the largest “deal-closing” fund of its kind in the nation. This fund is available to companies that offer significant projected job creation and capital investment. In addition, the State of Texas also provides a variety of grant programs that help support a growing, educated workforce and foster innovation. The Skills Development Fund assists community and technical colleges in financing customized job training programs that cultivate a strong talent pool for local businesses.
Further, the Foreign Trade Zone (FTZ), approximately 2,500 acres of Dallas-Fort Worth International Airport, includes a 621-acre business park. The FTZ program allows companies to defer, reduce or eliminate U.S. Customs duties and reduce inventory and distribution costs.
These advantages are only some of the reasons why leading companies choose to move to or expand within Irving-Las Colinas. Most recently, Caterpillar Inc., the world’s leading manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives, announced that it would open a regional headquarters this year in the heart of Las Colinas, the city’s urban hub, adding to Irving-Las Colinas’ growing list of Fortune 100 companies.
In 2020, Microsoft expanded its Irving-Las Colinas presence, transforming its 32-acre campus, and in April 2019 McKesson Corp., the nation’s largest pharmaceutical distributor, moved its Fortune 7 global headquarters from San Francisco to Irving-Las Colinas, attributing the relocation in part to the region’s exceptional talent and the unrivaled work environment available to employees.
“The companies and people who live, work and raise families in Irving-Las Colinas are our top asset,” said Beth A. Bowman, president and CEO of the Greater Irving-Las Colinas Chamber of Commerce and the Irving Economic Development Partnership. “Irving-Las Colinas offers the perfect mix of a business-friendly environment combined with modern infrastructure and top-quality amenities that appeal to today’s corporations and their employees.”
MICHIGAN: THE PLACE BUSINESS CALLS HOME
While the nation continues making incredible progress in the fight against COVID-19, effects from the ongoing pandemic may continue to ripple through everyday life for months and even years to come. The pandemic-accelerated trend in flexible work locations, for example, shows no sign of slowing even as the vaccine continues to roll out. In fact, in reading the daily news, one could be forgiven for believing that the increase in remote working means corporate location may not matter anymore.
That would be a mistake.
For companies providing professional and corporate services, the old realtor’s adage about the three most significant factors in a property’s value—“location, location, location”—may be truer than ever before.
Luckily, with more than a century of experience as a global business hub, Michigan has been on the front lines of changes in how companies evaluate future location decisions. That may help explain why 17 Fortune 500 companies are based in Michigan, making the state tied for having the 10th most Fortune 500 headquarters in the nation.
Companies continue to choose Michigan to locate their headquarters and businesses by tapping into the concentration of talent available for professional and corporate services industries, as it is home to more than 185,000 workers employed in the sector and ranks 12th in the nation for its degree completions in business, management and financial operations. Add to that the affordability of doing business in Michigan, with talent costs being roughly one-third of those in coastal markets, and Michigan is a logical choice for companies to call home.
This trend is already being recognized nationwide, with Michigan ranking among the top states for doing business in Tax Foundations’ 2020 State Business Tax Climate Index.
And thanks to its business-friendly climate, high concentration of tech talent, nationally recognized educational institutions and Pure Michigan quality of life, companies of all sizes are continuing to plant roots in Michigan.
That is why it comes as no surprise that global consumer self-care provider Perrigo would choose to build its new, $44.8 million North American Corporate Headquarters in Grand Rapids within Michigan State University’s Grand Rapids Innovation Park in the city’s Medical Mile district.
The Dublin, Ireland-based company expects to fill an additional 170 positions in the new headquarters, which will be the base for Perrigo’s consumer self-care presence. It will also house the company’s U.S.-based executive leadership team plus human resources, finance, information technology and legal positions. Additionally, company executives’ belief that Grand Rapids has the potential to become the “Silicon Valley of self-care,” speaks to the value proposition Michigan brings to a company like Perrigo, which can find the workforce it needs for manufacturing, R&D and headquarter operations, all within one region in the state.
But Perrigo is only one of the companies planning to locate, relocate or expand their operations in Michigan.
For example, Acrisure, one of the world’s top 10 insurance brokers, is also choosing to relocate and expand its global headquarters to downtown Grand Rapids where it will generate an investment of $33 million in the region. Acrisure has also committed to creating at least 400 new, high-paying jobs to its current statewide workforce of 873 jobs, with wages paying 125 percent of the regional average.
Clearly, global leaders like Acrisure and Perrigo are—like other companies in Michigan’s growing professional and corporate services industry—finding that Michigan’s business climate and skilled workforce make it an excellent fit for their locational strategies to continue growing and thriving on the world stage.
With the growing professional services sector and the talent pipeline in the state, Michigan is uniquely positioned to provide companies with workforce needs in manufacturing, R&D and a company headquarters all
in one location.
For more information on Michigan’s fit with your headquarters expansion, location or relocation plans, please visit michiganbusiness.org/pure-opportunity.