Texas and Nevada Cities Are More Suitable Than California for Corporate Headquarters: Study

Tesla cars recharge their batteries at the Geary Boulevard Supercharger in San Francisco on March 9, 2022. (Photo by Justin Sullivan/Getty Images)

Migration out of California has continued in 2022 as people and businesses choose to leave the state. A new study released by The Boyd Company on Oct. 26 named certain cities in Texas and Nevada as the most ideal locations for corporate headquarters relocations.

“Major corporations moving head office and major regional office operations out of California has become a norm today, not an exception,” John Boyd, principal with The Boyd Company, told NTD, a sister media of The Epoch Times.

The study analyzed different states’ tax structures by comparing operating costs for a corporate headquarters. It found that the five best cities were in Nevada and Texas, with Minden, Nevada coming in first. Cities ranked second through fifth were Leander, Plano, Round Rock, and Woodlands, which are adjacent to Texas’s major cities.

“We’re seeing a preference for suburban locations that are in markets desirable for relocating employees,” said Boyd. “This is an era of unprecedented mobility. Increasingly, workers want to move to areas that have a lower tax burden.”

According to the study, Nevada and Texas do not impose corporate or personal income tax, leading to higher savings on operating cost compared to California.

Boyd said this reflects the new “spoke and hub” model that businesses have taken up after COVID-era lockdowns. In this model, a business’s main location operates as the hub and other smaller branch offices function as spokes.

For cost estimation purposes, the analysis used a newly constructed 75,000-square-foot Class A corporate headquarters office employing 200 administrative support workers. Including all major geographically variable operating costs and average labor costs, it would cost approximately $17 million annually to operate a headquarters building in Minden, Nevada.

In San Francisco, the same building would cost a little over $21 million annually to operate.

In addition to costs, homelessness and crime are also contributing to a “California exodus.”

Boyd said one company now in question is Twitter. The question is whether or not Elon Musk will move the headquarters after his recent acquisition.

People Are Also Leaving

In addition to corporations leaving, so are many long-term residents.

“California just kept progressing and progressing in a direction I was not happy with,” Terry Gilliam, founder of the Facebook groups called “Leaving California” and “Life After California,” told California Insider’s Siyamak Khorrami.

He said he saw news articles about people and businesses leaving, so he decided to create a Facebook group to connect with people who felt similarly.

“I believed I was not the only person who was not happy living in California, so I started this Facebook group called Leaving California,” Gilliam added.

He said the weather in California is great, but overall there are more negatives than positives, including homelessness, tax increases, and inflation, which is currently around 10 percent.

The U.S. census from the past two years has shown that California, for the first time in its history, is shrinking in population. Much of the outflow is coming from people leaving San Francisco and Los Angeles for states with lower taxes.

The reduction in population also led the state to lose two seats in Congress last year.