This is an interesting topic that's only been covered in a handful of places, including (briefly) Dallas Business Journal. To quote that article:
"... the impetus to shed the Bay Area's pricey real estate, plentiful taxes, and exacting government regulations could see more companies relocating to North Texas..."
Indeed. In the last couple of years, there have been some "big name" corporate moves. McKesson moved its main HQ from San Francisco to Las Colinas. Toyota moved to the Frisco/Plano area in '16. Charles Schwab left California for Westlake. Black and Decker "reshored" production of some tools back from China into Fort Worth, and in the process they moved American corporate roles to North Texas too. Almost all of the 2019 corporate relocations into DFW came from San Francisco, as a bigger note.
We had previously written about some of the demographic projections for DFW from 2020 to 2029. We wrote that before COVID started up in full, and we are clearly not out of COVID yet, or anytime soon. So those numbers will shift, dramatically -- less in the near-term, because corporations aren't relocating people in this moment. But perhaps more in the long-term? Indeed.
See, companies are broadly run by cost-cutters -- not all companies, but many -- and as you saw with persistent COVID layoffs, a lot of companies really didn't have the cash-on-hand or payroll protection position that they thought they did. To carry people, which still needs to happen because many jobs have to be held by a human and AI tech isn't good enough or at scale yet, they need a better cost position.
If you're based in San Francisco and your argument is "talent," but now a lot of white-collar jobs are going to a hybrid remote model and you can get "talent" from anywhere with a WiFi connection, well ... North Texas starts to look a lot better in terms of tax structure, government regulations, cost of living for employees, compensation bands, and more.
That would explain the exodus of the past 10 years -- and perhaps a bigger exodus in the next 10.
So what would this mean for, say, Collin County?
So, based on the numbers above, a 2,200-square-foot home would go for about $305,800. Dallas-area has a $202 average per Zillow these days, meaning a 2,200-square-foot house would be $444,400.
If you're coming from San Francisco and sold there, you might have some nice cash to throw down a house, sure. But to get the same house at a difference of $139,000? That's a big difference.
Now, Fort Worth in some areas has a lower square foot price than Collin County, but a lot of these relocations are likely to go to the Frisco/Plano area. Living in Fort Worth and working in Frisco would be, well, quite a long commute. (I actually live in Fort Worth and had to go once a week to a gig in Frisco in 2018. It's not fun, even at once per week.)
So might we see the Collin County active listings dwindle from 4,065 on down? Not in the immediate moment, no -- but within 24 months, sure. We will see a corporate mindset shift around HQs (which will affect commercial real estate) and we will see companies relocating their main office to a better tax and cost position, which will boost DFW -- and a lot of that boost is likely to occur in Collin County.
Get ready. It will be interesting to watch.