The list of California companies that have moved their corporate headquarters to other states is growing. Dallas-Fort Worth, Tennessee, Arizona and Nevada are all seeing an influx of businesses leaving the Golden State. Last year, Charles Schwab relocated its corporate headquarters from San Francisco to Dallas. According to estimates, companies that left California acquired at least 133 million square feet elsewhere, and likely much more since this information is not always made public.
The Hoover Institution conducted a study to identify the reasons why businesses are leaving California. High tax rates, punitive regulations, high labor costs, high utility and energy costs, and a decline in quality of life were all cited as factors. Some of the most notable companies that have left California in recent years include Apple (AAPL), Nestle USA and Oracle (ORCL). While it may be an exaggeration to say that California is hemorrhaging people, some of the state's top companies and wealthiest residents are moving to states like Texas, Arizona and Florida.
In addition to large corporations, many startups are also leaving the Bay Area. Dropbox, Twitter and Facebook have all offered permanent remote work to most employees. First Foundation, a California bank, moved its holding company to Dallas; Digital Realty Trust moved its data center to Austin; and HomeLight announced it would move its San Francisco headquarters to Scottsdale, Arizona. Financial services company Flexible Funding said it would move its headquarters to Fort Worth, Texas.
In the first six months of 2020 alone, 74 companies moved their headquarters out of California. San Francisco ranked second only to Los Angeles with a total of 47 companies lost over that three-year period. This number is likely much higher since many relocations are not made public.A record number of companies are leaving California for states with a better business climate. Texas remains the top destination for businesses looking for a new home.
The Hoover Institution report provides more insight into why companies are moving out of California.