A new study from Hire a Helper, based on recent Securities and Exchange Commission (SEC) filings, reveals that approximately 9% of US corporations relocated their headquarters in the past fiscal year. This is the highest rate since 2017, and the reasons varied from reducing expenses, accessing advantageous tax rates, or positioning closer to their target market.
Significant corporate departures are occurring in states like New York and cities like Seattle, while lesser-known cities beyond major urban areas are becoming the new base for leading tech and pharmaceutical companies.
The relocation of corporate headquarters (HQs) to Miami could bring several positive effects to the city's real estate market:
Demand for Commercial Properties: With new companies setting up HQs in Miami, the demand for office spaces could increase. This might drive up the prices and rental rates for commercial properties, which can benefit property owners and investors.
Residential Property Demand: Alongside the influx of corporations, there would likely be an increase in Miami's population as employees move with the companies or as new job opportunities attract more residents. This could lead to higher demand for both rental and owner-occupied housing, potentially increasing home prices and rents.
Boost to Local Economy: The increased demand for housing and commercial properties can stimulate the construction industry and other sectors that support it, which could lead to job creation and an overall boost to Miami's economy.
Increase in Property Values: The combined increase in demand for commercial and residential properties could result in a significant appreciation in property values. This would benefit property owners, who could see an increase in their wealth, and local governments, which could collect more in property taxes.
Attracting Investors: A thriving real estate market could attract more investors, both domestic and foreign, to Miami. This can lead to an influx of capital into the city and further stimulate its economy.
Enhanced Infrastructure and Services: An increase in corporate activity and population could lead to investments in infrastructure and public services, which can make Miami more attractive to future residents and businesses.
It's worth noting that while these potential benefits can be significant, they should be managed carefully to avoid potential challenges such as a housing affordability crisis or a real estate bubble.
Corporate HQ Migration at a Seven-Year High
The latest SEC figures indicate that 593 (or 8.9%) of approximately 6,700 publicly traded US corporations relocated their headquarters during the fiscal year March 2022-March 2023.
This period saw the greatest rate of corporate headquarters relocation in seven years, showing a rising trend since falling below 7% in 2020, probably due to the pandemic.
In a year-on-year comparison, the 593 corporations that moved their headquarters in 2022-23 represent a 29% increase compared to the 458 corporations that relocated in 2021-22.
According to Hire a Helper's report, this is the highest annual increase in a decade, even surpassing the post-pandemic resumption of activity in 2021-22, which saw a 25% rise in corporate headquarters relocations.
Most Popular States for Corporate HQ Relocation
The trend of high corporate relocation continued with 24% of moving corporations opting to shift their headquarters to a different state. Here's the detailed analysis.
Florida saw an 86% net gain in corporations moving their headquarters to the state, the highest amongst all states.
Texas, which welcomed companies such as Hewlett-Packard and Caterpillar Inc. in the past year, recorded the second-highest net gain (71%).
Arizona and Utah also demonstrated strong performance, with a growth of 65% and 57%, respectively, in hosting new corporate headquarters.
Net corporate HQ moves by state in 2022-2023
Florida lead the way with the highest net gain in corporate headquarters
States Losing Ground in Corporate HQ Locations
Corporate office moving trends resemble individual relocation trends, with states like New York and California witnessing a surge of departures.
Surprisingly, Washington was the state most frequently abandoned by corporations, with 83% more companies leaving than arriving. New York (-51%) and California (-46%) followed, ranking second and third among states with the most significant loss of corporate headquarters.
Top Cities Gaining Corporate HQs
When considering specific destinations for corporate headquarters, Waltham, MA led the pack with the highest net growth across cities in the last fiscal year (+175%). Notable newcomers to Waltham, MA include Cogent Biosciences and CinCor Pharma.
Burlington, MA (+133%) and Spring, TX (+100%) ranked second and third, respectively, in growth. Three cities in Florida – Jacksonville (+67%), Tampa (+49%), and Miami (+33%) – were also among the top ten.
Cities with the biggest net gain and losses of corporate HQs
3 Florida cities are in the top 10
Cities Losing Corporate HQs
Contrary to expectations, Cambridge, MA was the city with the greatest net loss of corporate headquarters (-40%). Following Cambridge, Seattle (-37.5%), several Bay Area cities, and New York City (-13.4%) also witnessed significant losses of corporate headquarters over the last fiscal year.
Primary Reasons for Corporate Relocations
Hire a Helper's study suggests that corporations primarily relocate to access more affordable or advantageous locations, similar to individuals. This is reflected in the high influx of corporations into low-tax states like Florida and Nevada.
In fact, the Tax Foundation's 2023 State Business Tax Climate Index, which measures the business tax burden, lists Florida and Nevada among the ten least tax-burdened states. Texas, without a corporate tax, is not far behind in the 12th position.
High office space cost is another trigger for corporate relocation. Cities recording a net loss of corporate headquarters, such as New York City and San Jose, are among those with the highest business rental costs.
The rise of remote work during the pandemic years has compounded this issue, as large cities struggle with high office vacancy rates. Consistent with this, 62% of corporations that relocated in the past year moved to smaller cities with more affordable rental rates, as per Hire a Helper's analysis of 2022-23 SEC filings.
Florida is a top destination for businesses looking to relocate their headquarters. With a favorable tax environment, a growing and diversified economy, access to a talented and well-educated workforce, and an active and adventurous lifestyle, it’s easy to see why Florida is the top pick for businesses. As more and more businesses discover what Florida has to offer, we can expect to see continued growth and development in the state. If you're a business owner looking to take your operations to the next level or seeking to relocate, Florida should be at the top of your list.
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