The brokerage firm Charles Schwab announced today it would acquire TD Ameritrade in a $26 billion deal and as part of the transaction Schwab will move its headquarters to the Dallas-Forth Worth area.
The integration of the two firms is expected to take between 18 and 36 months, following the transaction’s close. The corporate headquarters of the combined firm will eventually relocate to Schwab’s new campus in Westlake, Texas, which is located in Denton and Tarrant Counties north of the cities of Fort Worth and Dallas.
Schwab was founded in San Francisco and will maintain a presence in the city. However, in my experience, once a company establishes a footprint in a business-friendly location, more jobs gravitate there over time.
The move isn’t surprising considering that Schwab’s founder and chairman, Charles “Chuck” Schwab, has said that “We’re pretty much a national company now. I’m not sure [we’ll stay in San Francisco] … we’ll continue looking at that as a possibility [but] as taxes go … and the costs of doing business here are so much higher than some other place.”
Schwab in Dallas/Fort Worth area
Even before the TD Ameritrade event, Schwab has been more than doubling its workforce in Westlake. Scheduled to open in 2019 is a $100 million phase of a 70-acre office campus. The initial half-million-square-foot office complex is expected to house 2,600 Schwab workers.
Next will come a second, 617,000-square-foot phase that will add two more offices, resulting in an overall capacity for between 6,000 and 7,000 employees when it opens in 2020 or early 2021. That represents more than one-third of the company’s current workforce of 19,100, signaling where the brokerage expects to concentrate its growth in the years ahead.
It’s growth looks like it will be a bigger benefit for Texas than California. “We have a lot of our growth outside of California – a lot more outside of California than inside California,” Mr. Schwab said. In San Francisco, the company employs 1,200 people – down from the dot-com bubble boom peak of 10,000 employees in 2000.
Schwab in Austin
Schwab is sprouting big time elsewhere in Texas, too, by opening its 469,000-square-foot, 50-acre Austin campus in May 2018 to house about 1,900 employees. Construction started later on an additional office building and parking structure – all of which is designed to give room for future growth.
The Austin location encompasses two five-story office buildings and will be home to employees within all 15 lines of Schwab’s business, including its digital accelerator program. The new hires are in I.T., Digital Services, Retirement Services, Compliance and Marketing, among others. Schwab’s capital investment in current Austin projects is estimated to be at least $196.7 million and the company is hiring talent across the state.
Ten other corporate headquarters move out of San Francisco since the start of 2018 include Aatonomy, Bechtel, Circa of America, Core-Mark Holding Co., GoCheck Kids, Lottery.com, Maxar Technologies, McKesson Corp, PrePaid2Cash Holdings and Xero.
If we were to include moves of companies out of Santa Clara, San Mateo and Alameda counties, the result would show Silicon Valley is the epicenter of companies opting for out-of-California locations in full or in part.
More about out of state moves can be found in this account from Nov. 20, entitled, “Companies Join People in Fleeing California.”
A report issued earlier in 2019, entitled, “Why Companies Leave California” addresses in depth the state’s hostility toward businesses. Examples include regulations requiring steep fines for minor infractions, a ruthless legal climate, escalating taxes and utility rates, high labor costs, and signs that more workers plan to depart California.
None of us should expect California’s business climate to improve any time soon since Gov. Gavin Newsom and his friends in the legislature (and bureaucrats in regulatory agencies) show signs they will continue to treat companies in an unduly harsh manner.