On December 11th, Oracle, the world’s largest database company, announced that it was moving its headquarters from Silicon Valley to Austin. The announcement, along with the major expansions from Apple, Facebook, Tesla, and others, is a spring in the cap of local business promoters. But it has also ruffled feathers among local residents angry at the seemingly endless rise in house prices.
Whether you’re a champion or a critic of the Oracle move, the ongoing influx of California corporations and executives shows no sign of subsiding. In fact, some watchers speculate that Facebook could follow Oracle if it moves its headquarters from the expensive San Francisco Bay Area to the less expensive Austin. On December 4, the Austin Business Journal reported that Facebook is looking for 1 million square feet of office space in addition to the space it has already rented.
Additionally, some people expect that the recent move of Tesla’s CEO, billionaire Elon Musk, to Texas will help attract other A-list executives here. Tesla is building a $ 1.1 billion auto manufacturing facility east of Austin-Bergstrom International Airport.
Other high profile newcomers from the Golden State include Drew Houston, co-founder and CEO of software company Dropbox; Douglas Merritt, President and CEO of Splunk software company; Joe Lonsdale, co-founder of software company Palantir and founding partner of venture capital firm 8VC; and podcaster Joe Rogan.
Vaike O’Grady, regional director of Austin housing data provider Zonda, says Oracle’s move adds fuel to the fire of the capital’s already sizzling home market. In October, the average home price in the metropolitan area rose to a record high of $ 365,000 as home sales increased nearly 30 percent compared to the same time in 2019, according to the Austin Board of Realtors.
While it’s unclear how many Oracle employees will actually work on the software company’s campus in southeast Austin, O’Grady says any population growth will put more pressure on local housing supplies. And that pressure will, in turn, drive house prices higher, she says. Bid wars are already underway for homes priced below $ 300,000.
Demand for high-end homes in the Austin-Round Rock metropolitan area is also growing.
Darin Walker, a local real estate agent specializing in luxury real estate, says he’s been contacted by about a dozen California-based executives in the past three months who are increasing their stakes and settling in Austin. Everyone was looking for homes in the $ 3 million to $ 15 million range. Walker says colleagues in central Texas who handle the high-end market are seeing a similar surge in activity.
“It was just one announcement after another from big tech companies, entrepreneurs and celebrities flocking from California to move to Austin,” said Walker, a member of the West Lake Hills city council.
John Boyd, a New Jersey corporate relocation consultant, says Texas in general, and Austin in particular, have a great reputation as a magnet for talent, innovation, and wealth.
“I expect more and more prominent CEOs, media representatives, professional athletes and famous entertainers to move to Texas in the coming months,” said Boyd.
In addition to the rising cost of living, one of the main reasons for the “Texit” from California to Texas is: The Golden State levies an income tax of up to 13.3 percent, while the Lone Star State levies no income tax.
With that in mind, experts predict that the cavalry of companies and people from California to Texas will increase in 2021.
“Companies want to go where they are valued,” says Boyd. “It wasn’t long ago a California legislature told Elon Musk – who runs one of the largest employers in California – to fuck himself. You can be sure that his reception in Texas will be much friendlier. “
Indeed, Texas Governor Greg Abbott and Austin business development representative are among those who roll out the welcome mat. Abbott calls the flight from California to Texas “an absolute tidal wave”. The governor says he recently contacted CEOs from across the country on a weekly basis with a view to moving to Texas.
“To get Austin so many big companies to make decisions about moving [to] The Austin headquarters are a clear signal that we’re on the move, ”said Laura Huffman, President and CEO of Austin Chamber Commerce, during a December 11 press conference held in response to the announcement by Oracle. “People have been keeping an eye on Austin all year long because people expected Austin to come out of the pandemic earlier [than many other cities]. We have shown this kind of resilience in other downturns as well. “
Huffman acknowledged the challenges of managing growth in the Austin area but pointed to progress in this area, such as voter approval in November of a $ 7.1 billion initiative with a new rail system and other transportation improvements.
“It is in our best interests to make sure we have a really high quality of life,” Huffman told journalists.
Paul O’Brien, CEO of Austin-based MediaTech Ventures, moved from Northern California to the capital in 2010. He says Oracle’s move will help the city develop into a business hub far more attractive than the San Francisco Bay Area.
O’Brien says, “Austin is not the next Silicon Valley or even a second Silicon Valley. Austin is what this is about. “
Local commercial real estate investor Ari Rastegar offers a similar mindset. He says the legitimate prospect of other companies like Apple, Facebook and Tesla joining will help cement the city’s status as the country’s “new technology hub”.
“Oracle calling Austin at home further proves how real the exodus is in Silicon Valley. These big tech companies have long-term investments in Austin, which means we can expect sustained and continued growth as Austin continues to grow on the world stage, “says Rastegar.