Economic diversification has protected North Texas from deep employment cuts at the same time that Houston is losing jobs due to its energy focus, according to a newly released employment report and related analysis.
“The Metroplex has been insulated from the crude oil price downturn because of the diversity of its employment base,” said Robert Kramp, director of research and analysis for CBRE Group Inc.’s Texas-Oklahoma region.
The commercial real estate services firm’s latest report cites Dallas-Fort Worth, Austin and northwest Arkansas markets as seeing a relocation boom as companies move to those areas. But when it comes to resilience against the economic tide, Fort Worth trails Dallas.
“For Worth has been more exposed than Dallas proper because Fort Worth is more energy focused,” Kramp said.
Still, the Dallas-Fort Worth area is becoming a collective financial hub as San Francisco-based Charles Schwab Corp. and TD Ameritrade, based in Omaha, Nebraska, plan new campuses in Westlake and Southlake, respectively. Meanwhile, insurance giant Liberty Mutual plans its own 900,000-square-foot campus in Plano as it consolidates offices nationwide.
“Dallas, in particular, is benefiting from strong demographics and a highly educated and talent workforce,” Kramp said.
Corporate relocations and expansions are nothing new for Fort Worth – Facebook and Amazon are just two of several recent expansions in the city – but a new factor is at play: the West Coast.
“What is different are numbers of corporate relocations and expansions that are coming from California-based companies,” said Kramp, referring to Charles Schwab and CoreLogic, among others.
“It seems like Texas is benefiting from those business decisions more so than in other states,” Kramp said.
Of the top 20 corporate expansions or relocations announced for Texas, Oklahoma and northwest Arkansas in 2015, six are in Dallas-Fort Worth, and the collective exodus represents more than 15,000 new direct jobs for the three regions, the focus on CBRE’s new report.
Favorable tax policies and logistics services in Texas have aided the state, such as the freeport exemption that saves companies local property taxes on in-transit inventory that leaves the state within 175 days. It allows firms to store goods here temporarily without paying taxes, lessening overall business expenses.
But why the recent rise in companies expanding and relocating to Texas?
“Clearly, companies have come out of the other side of the recession and are reevaluating growth opportunities. They can actually benefit, from a cost perspective, by choosing Texas over other markets like California,” Kramp said.
How long Texas benefits from the added tax base of new corporate citizens hinges on market conditions.
“Until the economy begins to cool – and I’ve heard the forecast ranging from 2017 to 2018 for when that’s expected to occur,” Kramp said.