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The cost difference between California and Texas explained

The migration of Californians to North Texas isn’t slowing down — it’s gaining steam.
Credit: Photo illustration by Rob Schneider/ Dallas Business Journal
Several companies relocated headquarters from California to Dallas-Fort Worth last year.

For CBRE Group Inc. (NYSE: CBRE), the world's largest commercial real estate services and investment firm, a headquarters move from Los Angeles to Dallas just made sense, company President and CEO Bob Sulentic told the Business Journal in October.

"Earlier this year, we just decided that with so many people here and with our new CFO, Leah Stearns, being located here — our CFO hadn't been here previously — we just decided that it was time to declare Dallas as our headquarters," Sulentic said. "We're not moving people as a result of this out of California and into Texas, but it will be our formal headquarters now. It's a really big and important market for us, as is LA, as is California, but this is where most of our leaders are. It just made sense to declare Dallas as our headquarters. We know we're going to grow a ton here and we've already been growing here." 

Other companies made similar moves out of California and into North Texas in 2020. According to experts, even more, relocations could be on the way in 2021. Companies making this relocation have cited issues like high taxes, burdensome business regulations, and a high cost of living as just some of the reasons for making a move to Texas.

“My employees were constantly saying, ‘Look, my commute is horrible, and my rent is astronomical for what I’m getting,’” said Darrell Mervau, president of FileTrail Inc. “And to be perfectly honest, I also told them, ‘I’m not going to pay you $400,000 a year so you can buy a house in Silicon Valley.’"

"So, we were really looking at improving their lives and moving somewhere where they could start accumulating assets.”

RELATED: Here are the California companies that relocated to Dallas-Fort Worth in 2020 

These reasons eventually drove Mervau to relocate his company from San Jose to Austin. Like North Texas, Austin is considered a top market for corporate relocations due to its business climate, comparatively low cost of living, and large talent pool, according to site selectors. 

Texas has been a magnet for company relocations and expansions for some time. For eight straight years, the state has ruled supreme in the Governor's Cup rankings produced by Site Selection magazine for total capital investment by the state. Now that trend appears to be accelerating because of cost concerns in coastal states as well as the sudden upheaval of the pandemic.

So, as companies trade in California for Texas, it begs the question: What’s the actual cost difference between the two states? On a narrower level, what opportunities does Austin or North Texas provide over Silicon Valley?

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