On a beautiful day in November 2023, a stunning view of the bustling downtown Dallas was captured from The Tower Club, an exclusive establishment located on the 48th floor of the iconic Santander Tower in the heart of the city. However, despite the impressive skyline, Texas’s metropolitan areas are currently grappling with a surplus of vacant office spaces. This is due to several factors, including the rise of remote work, overbuilding, and the pandemic’s impact on the economic landscape. To address this challenge, companies are exploring new ways to repurpose these empty spaces and turn them into something useful. One of the options gaining popularity is converting the vacant offices into residential housing, which could help to address the shortage of housing in the region.
The Federal Reserve Bank of Dallas has recently published a report that shows Texas has surpassed all other states in terms of job growth in the past decade. The report highlights that Texas has been able to attract a significant number of businesses from other regions, which has resulted in the creation of more jobs than any other state. This is a testament to the state’s business-friendly environment, which has been able to consistently attract companies from all over the country. The report provides a comprehensive analysis of the factors that have contributed to Texas’ success and provides valuable insights for policymakers and researchers alike.
More than 25,000 establishments relocated to Texas from 2010 to 2019, bringing more than 281,000 jobs with them and resulting in a gain of nearly 103,000 jobs for the state, data compiled by the Federal Reserve Bank shows.
Federal Reserve Bank senior economist Pia Orrenius said the report’s findings were similar to those of a previous one and that she believes the trend will continue in coming years.
The report said Texas appeals to relocating businesses for a variety of reasons, including its central location in the continental U.S., access to multiple large cities and business-friendly environment.
The state has also offered various incentive programs, including the Texas Enterprise Fund, one of the nation’s largest state programs to attract businesses, and the now-expired Chapter 313 program, which gave companies a tax break for 10 years in exchange for a commitment to contribute to local economic growth and school districts.
However, research from the Federal Reserve Bank of Dallas found that attractive economic fundamentals — like low taxes, low regulations, a growing population, a relatively lower cost of living and less union activity — are far more important than incentive packages when businesses make location and expansion decisions.
“A survey of such studies found that for at least 75 percent of incentivized firms, the firm would have made a similar location, expansion or retention decision absent the incentive,” the report said.
The state’s robust economic growth hasn’t come without side effects. As Texas’ population and economy boomed, its home prices and rents skyrocketed, putting more pressure on renters and making it increasingly difficult for tenants to become homeowners. Housing production hasn’t kept up with household growth, U.S. Census data shows, contributing to the state’s steep rise in housing costs.
California was the largest net exporter of jobs nationally, with Texas being a favored destination for businesses leaving that state. Others included Louisiana, New Jersey and Oklahoma.
The report also found that professional and business services accounted for about 30% of jobs migrating into the state, followed by 17.7% from manufacturing and 17% from trade, transportation and utilities.
The Texas economy created about 1.4 million jobs and lost 1.2 million jobs per year between 2010 and 2019, resulting in an average net gain of about 216,000 jobs per year. Business relocations accounted for a relatively small percentage of overall job creation and loss during that time.
Most migrating businesses landed in larger metropolitan areas like Dallas and Houston. Urban areas attracted 53% of arriving businesses, with suburban and rural areas capturing 36% and 12%. Small businesses, particularly those with fewer than 500 workers, accounted for about three-quarters of jobs migrating to Texas.
While the number of business relocations are significant, they represent only a small portion of the overall number of establishments in Texas, about 0.04%, the report said.
Reference
Published on:
