Apple recently announced its $1 billion plan to build a new office campus in North Austin, Texas. That seven-figure capital investment represents over $1,000 for each of 950,000 people currently living in Texas’ capital city.
Apple’s latest investment outside of San Jose’s Silicon Valley also helps to explain the meteoric rise in the demand for coworking office space, where workers are no longer anchored to a specific geographic location. As Apple’s CEO Tim Cook said,
Talent, creativity and tomorrow’s breakthrough ideas aren’t limited by region or zip code, and, with this new expansion, we’re redoubling our commitment to cultivating the high-tech sector and workforce nationwide.
Apple leases offices at Capital Ridge, a 216,000-square-foot Austin office property that was purchased for $96 million in Q2 2017, by Germany-based investor GLL
It’s High Noon In The Lone Star State
A recent article in Bloomberg notes that even before the new campus breaks ground, Austin is already home to the largest number of Apple employees outside of the company’s Cupertino headquarters. Apple’s second location in Austin will focus on numerous business segments including research & development, sales, customer support, and engineering.
But Apple’s new Austin location is about more than just multiple business centers. Deirdre O’Brien, Apple’s VP of People, stated in a recent press conference that the company aims to become Austin’s largest private employer:
We’ll start with 5,000 seats, with the ability to expand to 15,000 over time.
Supermarket chain H-E-B and Dell Technologies are currently the two largest private employers in Austin, each with over 13,000 employees.
You Don’t Just Move To Texas, It Moves Into You
It’s not only Apple that’s attracted to the business-friendly policies of Texas. During a recent interview with CNBC, Texas Governor Greg Abbot observed,
We get to pick the 5-star recruit companies that are coming to the Lone Star State.
Texas also came in #1 in CNBC’s list of America’s Top States for Business 2018, and for good reason. McKesson announced that the company is moving its headquarters from San Francisco to the Dallas area in 2019. Software giant Oracle opened a huge campus in Austin, and investment firm Pimco has announced plans for an artificial intelligence facility in Austin.
Other companies that have already made the move to Texas include convenience store distributor Core-Mark, Toyota Motor North America, and Charles Schwab.
In September 2016, Apple bought Riata Crossing North, a four-building office complex in Northwest Austin, for $84 million.
Everything Is Bigger In Texas, Except The Rent
Big business and high technology companies expanding in Texas doesn’t necessarily mean that the San Francisco Bay Area is losing its grip on high tech jobs. The New York Times notes that while Silicon Valley companies often find themselves in a fierce battle to hire employees, the Bay Area is still the center of the wealth-creating high tech industry.
But for how long?
As the cost of living continues to skyrocket in traditional technology centers like Northern California, it’s logical for companies to look at other places to call home. As the recent Knight Frank Your Space Report pointed out, a reality of business life today is that employers are increasingly going to where the well-educated labor force is.
When skilled workers know that the jobs will come to them, employees are increasingly choosing to live where the quality of life is high, and the cost of housing is reasonable. RENTCafe.com reports that the average rent for a 2-bedroom apartment in San Jose is almost $2,900 per month compared to an average rent in Austin of just over $1,400 for an apartment of the same size.
Texas Is A Blend Of Valor And Swagger
In the Washington Post, Texas Governor Abbott drives home the point of how affordable it is to do business in Texas:
Apple is among the world’s most innovative companies and an avid creator of jobs in Texas and across the country. Their decision to expand operations in our state is a testament to the high-quality workforce and unmatched economic environment that Texas offers.
Apple’s new North Austin campus will cover more than 130 acres of space, including 50 acres of preserved open space. Don’t be surprised if the property earns the coveted Platinum LEED certification from the U.S. Green Building Council. Apple plans on having the entire campus powered entirely by renewable energy.
Apple Isn’t The Only High Tech Company That’s Expanding
This latest move by Apple also mirrors recent major announcements by other leading tech companies in the U.S.
Amazon recently announced plans to build a location for its second headquarters in Long Island City, N.Y. Expansion by Google has been a boon for commercial real estate markets across the country, with new offices in Boulder, and the Chelsea Market in Manhattan.
Property images courtesy of Yardi Matrix.
