By Nicole Cornett, Managing Editor, Expansion Solutions Magazine
When looking to decide where corporate headquarters should be placed many companies, consultants and brokers are scouting areas where economic incentives, grants and programs are available. The question of where the headquarters should be located is something that continues to be examined by corporate executives. Though many federal programs are in place to assist companies that are driving jobs and investments into the economy, working with economic developers on the state, regional and community levels that have a ready, skilled workforce pool is a major factor. Along with a strong workforce, other key drivers for headquarters relocation projects include, but not limited to cost, logistics, transportation, and quality of life.
With state, regional and community economic development offices competing for the business, companies can seek even more advantages like tax breaks, grants and incentives which adds value for the companies and workers alike. Let’s take a look at some of the top locations around the U.S. that are considered headquarter hubs.
Top 10 Headquarter Locations
1. New York City, New York. New York City is known as the financial capital of the world with major institutions like Wall Street, the New York Stock Exchange headquartered here. Notable companies located in New York include JPMorgan Chase, Goldman Sachs, and Citigroup.
2. Silicon Valley, California. Silicon Valley is the epicenter of technology and innovation with the birth of tech giants like Apple, Google, and Facebook. Silicon Valley plays a major role in the influence of the tech industry as it is centered around the culture of innovation, venture capitalism with a startup ecosystem.
3. Chicago, Illinois. Chicago is a major transportation and logistics hub. The city is known for its diverse economy, including finance, manufacturing, and technology with companies like Boeing, United Airlines, and McDonald’s headquartered here. Chicago’s central location contributes to its appeal as a headquarters destination.
4. Dallas-Fort Worth, Texas. The Dallas-Fort Worth metroplex as a booming business hub. The region and state are vital to the U.S. energy sector, with companies like ExxonMobil. Texas’ business-friendly environment and economic growth is why major corporations like AT&T and Southwest Airlines are headquartered here.
5. Los Angeles, California. Los Angeles as a center for entertainment, media, and fashion with the presence of major studios, including Disney and Warner Bros. LA’s diverse industries contribute to its economic prominence. Other notable companies located in the area include Netflix and SpaceX.
6. Houston, Texas. Houston’s energy sector influences the global economy. Houston is a leader in the energy sector, with a focus on oil and gas with energy giants such as Chevron and Phillips 66 located in the region. Houston also plays an important role in space exploration through NASA’s Johnson Space Center.
7. Boston, Massachusetts. Boston has a reputation as an educational and healthcare hub with prestigious universities like Harvard and MIT. Boston’s intellectual capital and medical sector drives innovation and research with prominent biotech and pharmaceutical companies headquartered here.
8. Seattle, Washington. Seattle’s tech industry has transformed the city’s landscape with its thriving startup ecosystem and venture capital activity. Seattle is associated with tech giants like Amazon and Microsoft which has influenced many Seattle-based companies on e-commerce and cloud computing.
9. Atlanta, Georgia. Atlanta offers a strategic location as a transportation and logistics hub with major corporations like Coca-Cola and UPS headquartered in the state. The city is also growing its film and entertainment industry.
10. Charlotte, North Carolina. Charlotte has a major banking and finance center in the Southeast that headquarters the Bank of America and Wells Fargo and is known as a regional economic powerhouse.
Competing for Business
Let’s take a look at Amazon’s recent announcement of its new headquarter location in Virginia as an example of how regions, cities, and states are competing for business. Amazon received over 200 proposals from governments and economic development organizations in the U.S., Canada, and Mexico that touted multi-billion-dollar infrastructure projects, appeals based on the civic character, practical and cultural amenities of each city, and outright offers of billions of dollars in tax breaks.
Maryland and North Carolina were also competing for the project; however, with incentives like benefits from the Port of Virginia Economic and the Infrastructure Development Zone Grant Program as well as funding and services to support the company’s employee training activities were provided through the Virginia Jobs Investment Program.
Experts on the subject contend that cities may overbid in such cases and wind up negating the benefits of winning. They also contend that the use of tax breaks to secure company headquarters is the best way to maintain locations and workers already in place, rather than attempting to land new corporate residents.
The last few decades have solidified Virginia’s position as America’s hometown for corporate headquarters.
Virginia also ensures that new headquarters can quickly attract and onboard high-quality employees by offering a world-class, customized talent acquisition and training solution through the Virginia Talent Accelerator Program. As an alternative, Virginia Jobs Investment Program (VJIP) grants are available for companies that prefer to manage their own recruitment and training. Virginia Talent Accelerator Program clients span industries as diverse as manufacturing (The LEGO Group), aerospace (Rocket Lab), pharmaceutical manufacturing (Civica Inc.), and headquarters (CMA CGM Group).
In the Amazon example above one can see the key drivers for headquarters relocation projects are cost, logistics, transportation, and workforce.
Other Notable Headquarter Locations
A major factor to note also is not only transportation and costs alone, but specifically areas that already host a multitude of industry-related companies such as Michigan’s deep roots in the Automotive industry as to Texas in the Oil, Gas and Coal industry.
Michigan is home to 17 Fortune 500 companies and is in the top 10 for most Fortune 500 headquarters in the nation and ranks in the top ten by CNBC for headquarter locations. Companies continue to choose Michigan to locate their headquarters because of its strong talent offering and also provides a business-friendly climate, favorable tax structure and affordability.
States like Delaware and Louisiana rely heavily on chemical manufacturing, including pharmaceuticals, industrial chemicals and plastics. DuPont, one of the world’s top chemical manufacturing companies, is based in and operates in Delaware, but the state’s largest economic driver is finance and insurance, and it attracts top companies with its pro-business model, including low tax incentives and favorable laws for corporations.
Texas is also at the top of the list with 53 Fortune 500 corporations headquartered in the state. Recent history has shown a few examples of large U.S. corporations moving their corporate headquarters or even adopting a system of dual corporate headquarters. In 2020, both Tesla and Oracle moved their corporate headquarters from California to Texas. These moves are often influenced by political preferences, tax policies, or market conditions. Many tech companies have cited high taxes, housing prices, and cost of living as their reasons for relocating their headquarters to Texas. As of 2022, Texas hosts more Fortune 500 HQs than any other state.
Some of the strongest areas hosting headquarter locations are New York, which is home to 58 headquarters. Goldman Sachs, American Express, and CBS are all based in New York and have a collective revenue of over $1 billion. New York is not only a business hub, it is a global hub and is home to some of the financial centers of the world.
Closely following New York is Texas, with 50 headquarter locations based there. Texas businesses also pull over $1.4 billion worth of revenue with big businesses such as Kimberly-Clark, Dr Pepper, and Vistra Energy along with many other companies that sit within the energy sector, too.
California features 49 headquarters in the state — although it ranks third place, the yearly revenue is more than both New York and Texas, with over $1.5 billion in revenue. Combined, these top three states house nearly one third of America’s top companies.
Companies like McAfee, a global leader in online protection, announced its new regional headquarters located in Frisco, Texas this year, noting key drivers were based on the diverse cultural destination the city has become, and the many opportunities the company’s employees will have to be immersed in the community.
North Carolina is home to 13 Fortune 500 and 28 Fortune 1000 headquarters, including Honeywell and Advanced Auto Parts. North Carolina’s consistently top-ranked business climate, low cost of living, access to four international airports and highly educated workforce all create an incomparable environment for corporate success. North Carolina has the lowest corporate income tax rate in the United States at 2.5 percent. In fact, the state offers a low tax burden across the board and has the lowest total effective business tax rate in the nation according to a report published by Ernst & Young and the Council on State Taxation.
Due to Georgia’s competitive business environment and ease of access to the global market, 18 Fortune® 500 companies have chosen to locate their worldwide headquarters in Georgia. An additional 32 Fortune® 1000 firms have established their base of operations here, and more than 450 Fortune® 500 companies have a presence in the state. Georgia offers robust rail and highway infrastructure and is home to the most traveled airport in the world (Hartsfield-Jackson Atlanta International Airport) and the fastest-growing port in the nation (Port of Savannah) – all of which keep companies moving, growing and thriving.
Choosing the Right Location
There is often much more to a state or city for qualifying as a business hub than the business itself, for example, development in the area with lots of investment going into the cities, as well as networking facilities for professionals to meet up and discuss industry goings-on. If a city or state has the possibility to put businesses in contact with other valuable businesses, then it is working toward the future and appearing as a “hub.
A few important differences in corporate headquarters relocation projects include the likelihood of a project moving forward from an initial idea to implementation, the level of internal confidentiality, and the timing of project operations commencing in the new location.
Though one company might choose an area based on logistics and supply chain needs, other factors like employment regulations and environmental policies can be more rigorous than federal rules on a state-by-state basis, and tax laws also differ significantly from state to state. States vary significantly in terms of corporate regulations. While the desire to relocate to a state with less stringent corporate regulations is not a new motive for a headquarters project, the weight placed on this factor has increased significantly recently.
A collective reason that companies investigate a potential headquarters relocation is the desire for cost savings. Over time, cost savings from a headquarters relocation can be a huge factor in the success for the company and employees which can be substantial. Some of the key areas with the potential for cost savings include taxes, payroll, and real estate costs.
Another major factor in choosing the right location is access to a better transportation network including road, air, rail and water. Sometimes when a company chooses to move from a smaller metropolitan area to a larger metro, usually a strong logistics infrastructure is the deciding factor. Companies that do business globally may seek a location that provides better international air service for access to customers and company facilities.
Even companies that have only U.S. operations can benefit from increased accessibility to their facilities, suppliers, and customers. Commercial air service is always a component of headquarters relocation analysis, and is the common denominator among headquarters analysis, but some companies also have corporate planes and seek locations with convenient airport alternatives to utilize for private travel.
Workforce Plays a Major Role
The available workforce and ability to recruit and retain talent is key to the success of every company. Access to talent for specific headquarter locations varies significantly by geographic location. As cost of living and quality of life are increasingly impacting individual location decisions, areas that rate well in those categories are flourishing. However, some of the locations that have become increasingly popular in recent years are experiencing some growing pains. The total size of the labor force is a consideration, but a variety of factors including population and employment growth trends, unemployment rates, proximity to educational institutions, and commuting patterns all impact access to talent. Identifying areas that proactively prepared for growth and are successfully navigating an influx of employers and population provides tremendous opportunity for ongoing success.
