Corporate Location Trends

Presented By:
Andy Shapiro
Biggins Lacy Shapiro & Company
Walnut Creek, CA
Corporate Location Trends
Presented To:
The Corporate Real Estate Forum

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Just what you need . . . a consultant!

 What have been recent major announcements?
◦ Global
◦ U.S.
 What has been happening in Tech, specifically?
 How do companies make location decisions?
 How has California fared?
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Source: IBM “Global Location Trends” 2018
 In 2018 the US regained the lead in global FDI while the so-called “Big Three”
emerging markets all experienced significant reductions
 IBM attributes this to a global shift toward smaller projects as a result of
automation and the growing importance of proximity to markets, rather than
scale. These lower investment numbers also may reflect investor concerns about
operational risks in each of these countries.
Recent Global Investment
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Major U.S. Announcements 2014 - 17
 Major U.S. announcements between 2014 and 2017 reinforce
a long-established trend that has seen the southeast (and
Texas in particular) win the lion’s share of trophy projects.
Source: Conway Data, 2018

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Largest U.S. Tech Announcements
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 The competitive set changes dramatically when looking only at major tech
announcements in the U.S. Dominance in tech new jobs and investment shifts to
the coastal and mountain states, in particular California, Colorado, Utah, New York
and Virginia (Northern Virginia specifically).
 Despite all of the attention being lavished on Austin, the State of Texas still lags
significantly behind (more on this later).
Source: ICI Incentives Database, 2018

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Recent Major CA Tech Announcements
Company City New Jobs Investment
Bluebeam Multiple locations 223 $6.8 million
Conduent Commercial Solutions Bakersfield 400 $2.1 million
Confluent Palo Alto 616 $9.7 million
Course Hero Redwood City 265 $22.9 million
CU Direct Corporation Ontario 201 $42.9 million
Flexport Multiple locations 486 $2.2 million
GoFundMe Multiple locations 328 $1.3 million
Honey Science Corporation Multiple locations 254 $10.3 million
MalwareBytes Corporation Santa Clara 367 $7.8 million
Niantic Multiple locations 255 $7.3 million
Procore Technologies Multiple locations 739 $4.7 million
Riskalyze Auburn 217 $1.7 million
Sila Nanotechnologies Alameda 213 $138.5 million
The Trade Desk Ventura 205 $33.8 million
Wipro Mountain View 304 $8.1 million
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 Recent California tech announcements have included gains in software, cloud
computing, internet publishing and cybersecurity.
 While many are in Silicon Valley, new jobs and investment were distributed across
Northern and Southern California
Source: ICI Incentives Database, 2018

PROJECT TYPE Costs Talent Market Place Sites/Bldgs. Bus. Env. Risk
Knowledge Intensive ✓ ✓
Capital Intensive ✓ ✓ ✓ ✓ ✓
Talent Driven ✓ ✓ ✓
Cost Driven ✓ ✓ ✓ ✓ ✓
Recruit Nationally ✓ ✓ ✓ ✓ ✓ ✓
Recruit Locally ✓ ✓ ✓ ✓
Relocating Employees ✓ ✓ ✓ ✓ ✓
Few/No Relocations ✓ ✓ ✓
Public Company ✓ ✓ ✓ ✓ ✓ ✓ ✓
Private Company ✓ ✓ ✓ ✓
Decision-Maker Moves ✓ ✓ ✓ ✓ ✓ ✓
Decision-Maker Stays ✓ ✓ ✓ ✓
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• Reduce costs
• Achieve operational efficiencies
• Access raw materials and markets
Manufacturing
• Hire top-level engineering and product
talent
• Attract investors
• Benefit from proximity to others
Software
• Acquire marketing & financial talent
• Network with industry leaders
• Link with global community
• Offer attractive quality of life
Headquarters
• Purchase low cost power
• Enjoy reliable infrastructure
• Avoid disaster risk
Mission Critical
Ops
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Does CA Still Have an Edge In Tech?
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 While other markets may be gaining, according to CBRE Northern California
retains its position as the pre-eminent talent hub, despite the obvious
challenges (e.g., rising costs and competition).
 Their top ten tech talent markets include:
1. Bay Area
2. Seattle
3. Washington, DC
4. Toronto
5. New York
6. Austin
7. Boston
8. Raleigh/Durham
9. Atlanta
10. Denver

1313
Source: CBRE Tech Hubs, “Scoring Tech Talent 2018”
Look How CA Compares to Key Labor Market Competitors

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Source: “Why Silicon Valley Hasn't Moved to Texas (Yet)”,Bloomberg, 2018
And as an Investment Magnet
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Of Course There Are Challenges.
Rank Metro Area July 2015 July 2018 3Y Delta
1 New York City, NY +4,132 +34,032 +29,900
2 San Francisco Bay Area, CA +10,995 +31,798 +20,803
3 Los Angeles, CA +425 +12,251 +11,826
4 Boston, MA +1,667 +11,276 +9,609
5 Seattle, WA +1,182 +9,688 +8,506
6 Chicago, IL -1,826 +5,925 +7,751
7 Washington, D.C. +735 +7,686 +6,951
8 Dallas-Ft. Worth, TX -2,496 +3,641 +6,137
9 Atlanta, GA -2,301 +3,350 +5,651
10 Austin, TX +26 +4,949 +4,923
 According to LinkedIn “demand for data scientists is off the charts.”
Nationally there is an estimated shortage of > 150,000.
 Skill shortages are present in almost every large U.S. city, but they are
particularly acute in New York City, the Bay Area, and LA.
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Source: LinkedIn, 2018

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And They are Not Confined to Data Scientists
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. . . And Some Bright Spots
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Here’s a Tip for Your Partners in H/R

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And Perhaps Some Guidance on Your Next Location
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CA is Losing More than Workers to Other States
 Its losing companies as well. Joe Vranich (Spectrum Location Services), tracked 1,687
companies of all sizes that have relocated from CA to other states between 2008 and
2015.
 Texas has been one of the biggest beneficiaries of California’s largesse
 Drivers tend to be taxes, operating costs, housing costs, litigiousness, and regulation – the hot
buttons, but not the only causes.
Source: Joe Vranich, Spectrum Location Services, 2015
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California’s Incentive Regime is not Helping
 Cal Competes is the state’s primary tool. It has traditionally been
highly constrained:
 It is a non-refundable and non-tradeable tax credit;
 The total “pot” is but $180 million this year;
 Awards are made just three times a year;
 The period from application to approval is no less than 3 months; and
 Until this year a 20% small business set aside all but guaranteed that a large
chunk went to businesses in non-traded sectors such as accounting firms and
general contractors.
 The state lacks a Governor’s discretionary deal closing fund.
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CA has re-taken the lead in software from
Washington State, and outpaces Texas and
competing states by a wide margin
Source: “Why Silicon Valley Hasn't Moved to Texas (Yet)”, Bloomberg, 2018
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Texas also has been losing
ground in internet publishing
And in the unglamorous data
processing, hosting and
related services sector.
But Tech Seems to be More Resilient

Anybody Wanna Talk about Amazon?
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 Seattle Headquarters
◦ Over 40,000 direct employees
◦ Over $25 billion in annual payroll
◦ About 33 buildings totaling over 8 million in SF
 RFP announced for “HQ2” September 7, 2017
 RFP responses were due by October 19, 2017
 Final decision HQ2 location 2018
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 Business Environment
◦ Incentives
◦ Tax structure
◦ Major metros – at least 1 million
population
◦ Stable business-friendly government
 Labor Market
◦ Deep pool of technical talent
◦ Diverse population
◦ Higher education institutions
 Housing
◦ Proximity to headquarters
◦ Pricing and vacancy
 Location/Logistics
◦ Proximity to an international airport –
within 30 miles
◦ Preference for daily direct flights –
Seattle, New York, San Francisco/Bay
Area and D.C.
◦ Quick access to highway – 1-2 miles
◦ On-site access to mass transit
 Real Estate
◦ At least 500,000 SF for phase 1 (by 2019)
◦ Up to 8 million SF beyond 2027
◦ Campus style structure – close proximity
between buildings
 Telecom
◦ Optimal fiber connectivity
◦ Multiple cellular coverage maps
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Atlanta Dallas Montgomery County Philadelphia
Austin Denver Nashville Pittsburgh
Boston Indianapolis New York City Raleigh
Chicago Los Angeles Newark Toronto
Columbus Miami Northern Virginia Washington D.C.
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Note: Total incentive value may be based on a combination of grants, tax credits, savings and/or exemptions over different term periods.
Sources:
• http://www.businessinsider.com/amazon-hq2-cities-developers-economic-tax-incentives-2017-10
Incentive Value
(approximate) Finalist City
$ 8.5 billion Montgomery County, MD
$ 7.0 billion Newark, NJ
$ 2-3 billion Philadelphia, PA
$ 2.3 billion Columbus, OH
$ 1.7 billion Chicago, IL
$ 1.0 billion Atlanta, GA
$ 0.3-1 billion Los Angeles, CA
$ 0.1 billion Denver, CO
Over $50 million North Carolina
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 Do you believe AMZ will actually undertake an HQ2 project consisting of 50,000
employees (or intends to)?
 8 of the finalist cities: Dallas, Columbus, Nashville, Indianapolis, Atlanta, Miami,
Pittsburgh and Denver have limited mass transit networks (<5% take mass transit)
 5 of the finalist cities: Pittsburgh, Columbus, Nashville, Raleigh, and Indianapolis whose
closest airports have minimal global flights; not one of these airports provides a non-
stop flight to Asia, Amazon’s retail inventory hub
 Other cities that met all four of Amazon’s core criteria did not make the final list
including: Houston, Baltimore, Minneapolis, Tampa, St. Louis, Phoenix, Charlotte,
Montreal
 If 238 cities provided between 5 to 10 potential project locations, Amazon now has
access to 1,000 to 2,000 site details available for near future organic growth including
distribution/logistics footprint expansion
 The “winning” city would endure prolonged construction, increased traffic, increase in
rents, displacement of local residents
 Detroit, which did not make the final list, in response to Amazon’s critique on weak
infrastructure, is now pushing for a regional transportation plan
 Is site selection best pursued through public or confidential process? (Apple vs. Amazon)
Sources:
https://www.citylab.com/equity/2018/05/the-hypocrisy-of-amazons-hq2-
process/560072/
http://www.businessinsider.com/amazon-new-headquarters-reaction-problems-2017-
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 Will the RFP process have been an overall positive for respondent
communities?
 Pros
 A shot at a transformative project
 Galvanize political and bureaucratic will to come together behind consensus to do
what it takes to be competitive for major opportunities; clear-eyed focus on
weaknesses to be addressed.
 Spur specific initiatives to address weaknesses (mass transit, work force, incentives)
 Dress rehearsal/up their game
 Other?
 Cons
 Be careful about what you wish for….
 Other companies steering clear of markets perceived to have “AMZ risk”
 Excessive impacts on regional infrastructure and resources
 Incentives offers set dangerous precedent
 Other?
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Top Global Announcements 2014-2017
Country City Company Project Jobs Investment
Costa Rica Limon APM Terminals Deepwater port 550 $1 billion
China Zhoushan Boeing Aircraft assembly 2,000 $55 million
Ecuador Posoria, Guayas DP World Container port 1,000 $1.2 billion
China Chengdu GlobalFoundaries Semiconductor fab 2,500 $9 billion
China Jining, Shandong Hixih Rubber Tire mfg. 2,000 $410 million
China Xuzhou, Jiangsu Jiangsu Jinpeng Indus. Electric vehicle mfg. 3,500 $393 million
India Paradip, Odisha JSW Steel Steel mill 30,000 $8.5 billion
Sweden Skelleftea Northvolt Battery mfg. 2,500 $4.7 billion
Indonesia Bekasi, West Java SAIC/GM/Wuling Auto Auto assembly 3,000 $700 million
China Guangzhou Sakai Display Products Display screen mfg. 15,000 $8.8 billion
Vietnam Thai Nguyen Samsung Mobile phone mfg. 15,000 $3 billion
South Korea Pyeongtaek Samsung Semiconductor fab - $13.5 billion
Taiwan Tainan Taiwan Semiconductor Semiconductor fab 4,000 $17 billion
Source: Conway Data

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Turkmenistan Kiyanly,Balkan Turkmengas Ethane cracker 1,300 $3.4 billion
Philippines Hinobaan Tsuneishi Heavy Indus. Ship recycling 5,000 $300 million
Argentina Buenos Aires Volkswagen Automotive assembly 2,500 $667 million
India Kutch, Gujarat Welspun Group Textile mfg. 5,000 $293 million
Taiwan Kaohsiung Windbond Electronics Semiconductor fab 1,000 $11.1 billion
China Anji, Zhejiang Zhongce Rubber Tire mfg. 8,000 $620 million
Belgium Antwerp Energy Recovery Sys. Ammonia/Urea mfg. 900 $4 billion
Brazil Goiana, Pernambuco Fiat Chrysler Automotive assembly 3,300 $1 billion
India Maharashtra Foxconn Semiconductor fab 50,000 $5 billion
Tanzania Mtwara Helm, AG Fertilizer mfg. 10,000 $2 billion
China Wuxi, Jiangsu Infineon Technologies Semiconductor fab 2,500 $300 million
United Kingdom Solihull Jaguar Automotive assembly 1,300 $760 million
India Sanand, Gujarat Maxxis Tire Tire mfg. 2,000 $400 million
Source: Conway Data

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India Satarda, Maharashtra Shree Uttam Steel Steel mill $3 billion
China Wuhan, Hubie Sheng Wuhan China Star LCD display mfg. 5,000 $2.5 billion
China Hunan Sheng ZTE Corporation Telecomm equip. mfg. 5,000 $644 million
Switzerland Zurich Biogen Idec Biopharmaceutical mfg. 400 $1 billion
Ethiopia Mugher Dangote Cement mfg. 1,300 $450 million
India Bengaluru ExxonMobil Shared services center 1,000 $500 million
Singapore Singapore GlaxoSmithKline Regional headquarters 1,000 -
Malaysia Sarawak Huchems Tanjung Kiduron Petrochemical mfg. 400 $1 billion
South Korea Ulsan Hyosung Corporation Chemical mfg. 500 $850 million
India Karoli, Rajasthan Intech/Glo-Tech ? 7,500 $158 million
Argentina Cordoba Nissan Motor Company Automotive assembly 1,000 $600 million
Singapore Singapore Rolls-Royce Aircraft engines 800 $700 million
Germany Cuxhaven Siemens Wind turbine mfg. 1,000 $227 million
Source: Conway Data

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Guatemala Guatemala City Allied Global Shared Services 2,000 $5 million
India Hyderabad Amazon Software Development 5,000 -
Poland Wroclaw & Poznan Amazon Distribution Centers 6,000 -
Macedonia Bitola Kromberg & Schubert Electronics mfg. 2,500 $27 million
Malaysia Sarawak Cosmos Chemical Chemical mfg. 600 $1.2 billion
Vietnam Danang Danang Rubber Tire mfg. 1,000 $140 million
Spain Getafe EADS-CASA (Airbus) Aircraft assembly 500 $150 million
Hungary Racalmas Hankook Tire Tire mfg. 950 $400 million
South Africa Atlantis Hisense Appliance mfg. 1,200 $34 million
United Kingdom Newton Hitachi Rail Europe Rolling stock assembly 730 $128 million
Ireland Kildare Intel Semiconductor mfg. 800 $4 billion
Malaysia Rawang Perodua Automotive Assembly 1,200 $258 million
Brazil Itatiaia Jaguar Land Rover Automotive Assembly 500 $437 million
Source: Conway Data

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Chile San Antonio Maersk Reefer mfg. 2,200 $170 million
Vietnam Thai Nguyen Samsung Cell phone & tablet mfg. 2,000 $3.2 billion
China Foshan & Changsha Volkswagen Automotive assembly - $4.1 billion
Source: Conway Data

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Top U.S. Announcements 2014-2017
State City Company Project Jobs Investment
Kentucky Hebron Amazon Air Hub 2,000 $1.5 billion
Kentucky Wurtland Braidy Industries Aluminum mill 600 $1.3 billion
Nebraska Fremont Costco Poultry Processing 800 $300 million
Tennessee Maryville Denso Distribution Center 1,000 $1 billion
Minnesota Thief River Falls Digi-Key Corp Distribution Center 1,000 $300 million
Louisiana New Orleans DXC Technology IT Services 2,000 -
North Carolina Davidson Egger Wood Products Furniture HQ 770 $700 million
Kentucky Pikeville EnerBlu High Power Batteries 985 $372 million
Wisconsin Mt. Pleasant Foxconn LCD Mfg. 13,000 $10 billion
Texas Corpus Christi ExxonMobil Ethane Cracker 600 $10 billion
Indiana Indianapolis Infosys IT Services 3,000 -
Arizona Chandler Intel Semiconductor Fab 3,000 $7 billion
Utah Draper Pluralsight Software HQ 2,400 $373 million
Source: Conway Data

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South Carolina Newberry Samsung Appliance Mfg. 950 $380 million
Arkansas Decatur Simmons Foods Poultry Processing 1,500 $300 million
Kansas Wichita Spirit Aerosystems Aerospace mfg. 1,000 $1 billion
Kentucky Georgetown Toyota Automotive mfg. 1,200 $1.3 billion
North Carolina Rocky Mount Triangle Tire Tire mfg. 800 $580 million
South Carolina Berkeley Volvo Automotive mfg. 1,900 $520 million
Louisiana Pineville American Specialty Alloys Aluminum Mill 1,450 $2.4 billion
New York Marcy AMS AG Semiconductor fab 700 $2 billion
Nevada North Las Vegas Faraday Future Electric Vehicle mfg., 4,500 $1.3 billion
Kentucky Louisville Ford Motor Automotive assembly 2,000 $1.3 billion
Michigan Warren General Motors Engineering/Design Ctr. 2,600 $1 billion
Tennessee Alcoa Advanced Munitions Ammunition plant 605 $553 million
Arizona Mesa Apple Data center 150 $2 billion
Source: Conway Data

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New York New York Fresh Direct Central Kitchen 1,000 $112 million
Texas Arlington General Motors Automotive assembly 600 $1.4 billion
Texas Plano Liberty Mutual Regional HQ 5,000 $355 million
South Carolina North Charleston Mercedes Benz Automotive assembly 1,300 $500 million
North Carolina Clayton Novo Nordisk Insulin Injector mfg. 690 $1.2 billion
West Virginia Martinsburg Procter & Gamble Personal care products 700 $500 million
South Carolina North Charleston Boeing Aircraft assembly 2,000 $1 billion
Missouri Kansas City Cerner IT engineering center 15,000 $4.3 billion
Georgia Dalton Engineered Floors/JBBS Carpet and flooring mfg. 2,000 $450 million
Tennessee Clarksville Hankook Tire Tire mfg. 1,800 $800 million
Louisiana Baton Rouge IBM Shared services center 800 $55 million
North Carolina Charlotte/Cary MetLife Global technology & Ops. 2,600 $125 million
Texas Ft. Worth Motorola Mobility Smartphone assembly 2,000 $3 million
Source: Conway Data

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Wisconsin Kenosha Amazon Warehouse 1,100 $238 million
Alabama Mobile Bayer Chemical Mfg. 180 $400 million
Arkansas Osceola Big River Steel Steel Mill 525 $1.2 billion
Texas Houston Chevron Chemical Mfg. 1,750 $600 million
Ashville North Carolina GE Aviation Engine Components Mfg. 242 $195 million
Texas Katy GEICO Claims Center 1,000 $8 million
Florida Estero Hertz Global Headquarters 700 $60 million
Tennessee Alcoa ProNova Solutions Headquarters / R&D Ctr. 525 $52 million
Arizona Tempe State Farm Claims, Customer Svs. 2,100 $600 million
Texas Richardson State Farm Claims, Customer Svs. 8,000 -
Texas Bay City Tenaris Steel mill 600 $1.5 billion
Source: Conway Data

4141
Comparisons of Top 10 Tech Markets
Bay Area Seattle Wash, DC Toronto NY Austin Boston
Raleigh/
Durham
Atlanta
Denver
Total Tech
Jobs
329,200 145,100 248,200 241,400 254,300 69,600 114,000 59,400 134,800 99,800
% Jobs in
Tech
9.8% 8.8% 8.0% 8.9% 3.8% 7.0% 6.2% 6.6% 5.1% 6.2%
Growth in
Tech Talent
31.0% 19.4% -1.3% 51.5% 17.2% 20.3% -4.0% 20.7% 34.7% 23.8%
%
Millennials
16.1% 21.3% 20.2% 14.6% 16.3% 19.7% 24.1% 19.2% 20.1% 19.3%
Avg. Tech
Wage
$125,000 $117,300 $111,100 $83,200 $112,600 $95,000 $103,700 $94,800 $92,900 $100,800
Avg. Apt.
Rent
$2,890 $1,710 $1,720 $1,000 $4,004 $1,210 $2,180 $1,060 $1,160 $1,430
Gross Office
Rent
$62.73 $34.17 $39.73 $26.60 $74.88 $34.99 $37.82 $25.71 $26.25 $27.06
Source: CBRE

New York Princeton Chicago Walnut Creek
www.BLSstrategies.com
925-239-1711
ashapiro@BLSstrategies.com

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