Exodus of Corporate HQ from California Keeps Growing

The exodus of corporate headquarters from California accelerated in 2021 and shows no signs of abating this year, with Texas by far the top relocation destination for HQ moving out of the Golden State.

More than two dozen California-based companies moved their headquarters to Texas last year, with Dallas-Fort Worth and Austin topping the list of TX metros that became the new home for these CA firms.

In December, Tesla moved its HQ from Palo Alto, CA to Austin, where Tesla is about to open its newest Gigafactory assembly plant for electric vehicles. Tech giant Oracle also moved its HQ from Silicon Valley to Austin last year.

Infrastructure engineering giant AECOM, a Fortune 500 company, announced in December it will relocate its global HQ from Los Angeles to Dallas. The roster of California companies who have moved their corporate HQ to the Dallas-Fort Worth metro includes CBRE, Charles Schwab Corp. and the telecom company DZS.

Metros in Tennessee, Arizona and Nevada also are having great success in luring California’s corporate headquarters to their states. Since 2018, 25 corporate HQ have moved from California to Tennessee, with 15 of them choosing to relocate to Nashville.

Nearly 300 corporations have moved their headquarters out of California since the beginning of 2018, according to Stanford University’s Hoover Institution. The pace of this exodus accelerated in 2021, with 2020’s total of 74 HQ relocations from California exceeded in the first half of 2021.

In a 2021 report entitled Why Company Headquarters Are Leaving California in Unprecedented Numbers, Hoover Institution said an exceedingly poor business tax climate is driving companies out of California. 

The Tax Foundation’s 2021 State Business Tax Climate Index ranked California at no. 49, with the Golden State outranking only New Jersey, which perennially lands at the bottom of the Tax Foundation’s list.

“California is notorious for imposing excessive real estate taxes while disregarding the financial strain placed upon businesses,” the Hoover Institution report said.

State and metro economic development agencies in lower-tax states like Texas and Tennessee have been aggressively courting California companies for several years, often bashing the business climate on the West Coast as they tout the attributes of their locations.

In a recent interview with Nashville’s WKRN-TV about Tennessee’s success in luring CA‘s corporate HQ, Bob Rolfe, director of TN’s Department of Economic and Community Development, didn’t pull any punches.

“California has become the least business-friendly state, not only in the US, but across the globe,” Rolfe said.