DALLAS, TX – With companies across the U.S. rethinking their business models amidst the pandemic and envisioning a post-COVID world, some executives are considering or already have relocated to a different state, and North Texas has been the beneficiary of many of those moves.
Many compelling factors, including a pro-business climate and tax considerations, exist for Dallas-Fort Worth as a top destination for relocating or expanding corporations, said Chad Robottom, Dallas market president of Embark, an accounting/finance advisory firm that assists companies in transition, including companies transferring their headquarters to Dallas-Fort Worth.
On the flip side, relocations come with unforeseen perils and uncertainty. A relocation consumes time and resources and exposes companies to new risks that can severely impact operations.
In the interview that follows, Robottom, a CPA, discusses factors to contemplate if a company is eyeing a move or just completed one and he delves into DFW’s talent pool and its current and future place on the corporate relocation stage.
How does Embark work with companies that are either relocating or considering a relocation?
If a company is relocating to DFW, the stats out there would say that generally 35 percent of the employees are retained. There’s a substantial talent gap as companies are transitioning from, let’s say, San Francisco to Dallas. As companies are looking to engage and hire full-time employees, there’s going to be a period of time where they lack the respective resources to get the day-to-day accounting functions done. Embark can step in from a continuity standpoint to help them get from Point A to Point B until they can find a full-time employee. Then, from a transactional standpoint, companies still have to engage in transactions and day-to-day operations. We can help out from a technical accounting standpoint, from a financial reporting standpoint, all things that feed under the umbrella of the office of the CFO.
What are you seeing in Dallas from a corporate relocation perspective relative to other markets that you are in?
Dallas has always been a very business-friendly environment. Speaking on the corporate relocation standpoint, Dallas is always No. 1 or at least in the Top 5 places that corporations are relocating to. McKesson, Charles Schwab. There are a lot of incentives from both the tax standpoint and the grant standpoint that are allowing companies to relocate here. The influx of companies and the talent that is here is just amazing to see. It’s driving up housing prices. Historically you could go out in the suburbs and buy a home for $350,000, and those prices have now doubled. Population is going up, and business. With population going up, that just drives a lot more opportunity. It’s just been exciting.
How does DFW’s talent base stack up against the cities we compete with for corporate relocations?
DFW has a phenomenal talent base. You’ve got great universities here. You’ve got businesses here where people are always looking for new opportunities.
On the flip side, you’ve got so much competition here in the market. While you do have a pretty good talent population, you’re going to be competing with other companies. Consequently, compensation costs are going to rise because you are going to have to pay for that top talent. We are seeing that personally in our industry as we’re looking to recruit and hire the best and the brightest, we do find ourselves in a bidding war for top talent. It depends on the industry. If you’re talking about less skilled labor, then it may not be as much of an issue, but if you’re really looking for specific roles for specific industries, it could be a challenge that could result in higher compensation costs. So there’s a benefit to the talent situation, but on the flip side, you’ve got to compete with other companies that have deep pockets and that are willing to shell out to make sure that they get the best and brightest people out there.
You mentioned earlier the population influx causing housing prices to rise. Comparatively affordable housing has always been one of DFW’s main draws for people and companies looking to relocate. Have housing prices risen to the point that it’s no longer an advantage?
Yes. I live in East Dallas and I think about the first home that my wife and I purchased. We were very young professionals with that middle-class, median income, and we were able to afford a house at a very young age. But now, the price points continue to go up. Property taxes continue to go up. The cost of living here is still manageable compared to the New Yorks and the San Franciscos, But that draw of being able to come in and afford a decent-sized home within the heart of Dallas is now slowly going away. You’re seeing a substantial uptick, though, like in Frisco and Allen. Individuals are starting to move further out to get more affordable housing, and also you’ve got the benefit of the school systems there as well. I do think that the rising prices of housing in DFW is going to create challenges for people wanting to live in DFW.
How do you assess the job creation scene in DFW? We were cruising at a pace of over 100,000 new jobs a year before COVID hit, but the pandemic crashed that party. What is your assessment of the job market?
Job creation is on the uptick. Going back to these companies relocating and in theory only retaining less than 50 percent of their workforce, it is driving a lot of job creation here in DFW. We are starting to see fewer jobless claims and an uptick in new jobs here.
Austin has had a strong couple of years for corporate relocations. Do you see Austin becoming more of a hotspot than DFW for headquarters and major expansions by out-of-state companies to Texas?
I still think Dallas is going to see quite a bit of influx. According to the (Dallas Regional Chamber) there are still north of 100 planned transitions of public company headquarters here in DFW. Austin is obviously a very prime destination if you think about Elon Musk and Tesla recently transitioning there. They’re building the new Gigafactory there. I think it’s going to be a combination. I think both cities will continue to see their fair share. But Dallas is just a larger city, quite frankly, there’s more space, more real estate, and from an office space standpoint, Dallas trumps Austin. The convenience factor and the infrastructure in DFW is a bit better than going to Austin. While we have our fair share of traffic in DFW, every time I travel to Austin, it’s gridlock.
Where does Embark operate?
We are headquartered in Dallas. That’s where Embark got started, but we’ve got offices in Dallas, Austin, Houston, Denver, Oklahoma, Salt Lake City, Phoenix and Tampa. We have eight offices and plan to have 10-12 in the next 12-18 months.
Where do you plan to add offices?
We are looking at North Carolina, Chicago and Atlanta. Typically, if there is a Big 4 presence in any respective market, there is a need for our services, and that’s how we make decisions as to where we’re going to go.
What’s changing in your field?
Things are changing every day. COVID hit and there was a substantial pullback from a professional services standpoint. A lot of companies put a halt on spending. As we are slowly starting to re-emerge from the pandemic, despite the fact that it’s still here, I think the spigot has turned back on substantially. Business is extremely heavy right now. We’re seeing a lot of opportunities in the marketplace. We’re trying to hire as quickly as we can, so talent is extremely challenging to go out and get since that competitive market from a talent standpoint is very competitive.
There are a lot of transactions, too. The capital markets are starting to open up slowly and as the capital markets open up, we’re seeing a lot more M&A transactions, which is driving substantial demand for our services. We’ve experienced record months and record quarters and we’ve got a line of sight to seeing that continue to the latter half 2021 and beyond.
