Texas is becoming a hotspot for corporate relocation: Three of the top five markets for headquarters relocations between 2018 and 2023 are all in the state, according to a new report from CBRE.
Yahoo Finance's Rick Newman appears on Asking for a Trend to discuss why companies are turning to Texas and the potential for a new Dallas-based exchange.
For more expert insights and the latest market trends, click here to watch the full episode of “Ask the Trends.”
This post was written by Melanie Leal
Video Transcript
One state has caught the attention of some businesses.
Texas is becoming an increasingly popular destination for companies to relocate.
That's really been the case over the past few years.
Looking at this picture from 2018 to 2023, CBRE says there is an increase nationwide in the number and number of cities attracting corporate headquarters.
Austin was number one here.
We know how popular it has become.
There's been a big boom in real estate, and we're seeing that in Dallas and a little bit in Houston right now.
The top three cities in Texas are Nashville and Denville, but this Denver doesn't necessarily mean those headquarters are populated.
Only a few executives will be based in Texas, while the rest of the employees will likely remain elsewhere.
But, nevertheless, it's definitely a trend here.
The latest news is that a Texas stock exchange is planned, with big backers including BlackRock and Citadel.
Here are the latest news headlines happening in Texas.
But we wanted to talk more broadly about this Texas migration trend.
Let's hear from Rick Newman, senior columnist at Yahoo Finance.
Rick, the reason we thought of you on this is because there's a political element to all of this.
Texas doesn't have an income tax, right?
In recent years, certain political trends have been observed.
However, it has been said that Austin is a bit isolated in that respect.
It's interesting to see how these companies do things, isn't it?
Hmm, I don't really understand.
That's surprising, Julie.
Well, Governor Greg Abbott of Texas is similar to Governor Ron DeSantis of Florida.
They characterize their state as a place where woke people go to die.
Umm, don't bring your woke politics here.
We are committed to our business.
Well, let's keep it traditional.
So, as we're talking about new stock exchanges, I'll ask the audience here: How many stock exchanges do you think there are in the United States?
Some of you may have heard of the New York Stock Exchange and Nasdaq.
So, there are two, and actually 13, stock indexes in the United States.
There is one in Boston and one in Chicago.
Yes, in other cities too.
And I think most of them are harkening back to a time when cities in those regions were industrial centers, but not so much anymore.
So Texas is clearly a business haven.
Obviously, the U.S. energy industry is essentially concentrated in Texas, both in the Permian Basin, where the energy comes from, and also in all the energy companies that are headquartered in, for example, Houston.
So, I think this makes sense, but it doesn’t mean that big companies will automatically move from NYSC and NASDAQ to less conscious companies.
Uh, exchange.
It's a Texas-based ba.
I mean, it must be a really good reason.
Well, it's for economic reasons.
In other words, companies must uphold their fiduciary duties to shareholders.
There must be a strong economic justification for changing exchanges.
I looked into this today.
This is something I'm not familiar with, but NASDAQ has actually been successful in attracting some companies from the NYSE, and they've done that by saying things like, “Well, your company's stock will be less volatile on our exchange.”
technical issues related to the closing of trading and auctions at the beginning and end of the day;
And companies think, we think, yeah, that's good for shareholders.
They may get the job done.
It's not something that happens very often.
Perhaps the Texas Exchange could obtain IP OS in other parts of the Texas energy market, or surrounding markets.
Hmm, but this isn't a bad thing and could even be beneficial in the future.
Well, it's interesting, and I was a little surprised to see reports that BlackRock was one of the companies that was supporting this, because BlackRock and its past ESG agenda has been criticized by, for example, certain pension funds in Texas as being so-called “woke.”
right?
However, they are reportedly in support of the exchange.
I think the idea that this is about ESG and DE I and all these multi-letter acronyms is, um, a little bit misleading, because if companies are actually choosing exchanges because they're like, “I just want to be with the ants that are the anti-woke crowd,” I think that's a mistake.
If they made such a claim, I think they would be subject to a shareholder lawsuit.
Well, the economics of joining an emerging exchange are not favorable.
So, the NY IC or NASDAQ would say that our platform has the deepest market and the most institutional participation.
We are where you want to be to serve your shareholders.
And I don't think AC can say “Yeah, but we want an anti-Woke exchange II,” and I can see how that wouldn't be as popular.
So I think if this were to happen, they would have to make the case that from a financial standpoint, this is a good thing for, say, Nasdaq, focusing on tech companies.
Even though it has grown beyond being a technology company.
Well, maybe the Texas exchange could focus on energy companies.
I mean, remember when Facebook went public there was a big fight over which exchange would get the IP O. So, we might see some big energy IP Os in the future and one of them might say, let's try out the Texas exchange because they're in our neighborhood and they think they have what we need.
So maybe this is where it goes from here, Rick, let's see.
Thank you so much for covering it for us.
appreciate.
