How North Texas Competes for Large Employers, Retains Talent

Executives of three large companies explained why they chose north Texas for new headquarters projects, during the opening session of the 2016 ULI Fall Meeting in Dallas: the availability of affordable housing and a strong local economy.

All three companies—State Farm, Toyota, and JPMorgan Chase—went through an extensive search process for their development sites. Each company considered several options around the United States before settling on the Dallas area, which ULI Americas Chairman Patricia Healy said is developing as “one of the great urban regions of the 21st century.”

In recent years, a dramatic shift in how corporations approach their planning decisions has occurred, the panelists said, noting that lease terms, zoning, and government incentives have taken a back seat to human resources (HR) concerns.

“These look like real estate events, but they’re really all about people,” said David Arena, cohead of corporate real estate for JPMorgan Chase, which is building more than 1 million square feet (93,000 sq m) of space in the Legacy West project in Plano.

When State Farm and Toyota opened discussions about the Texas projects, panel moderator Steve Van Amburgh, chief executive officer of KDC Real Estate Development and Investments, said he was surprised to find that 80 percent of the members of the corporate search teams were from the human resources and operations areas of their company, not the real estate department. In the past, HR executives were always in the room for discussions, but now they’ve moved to “the top of the decision stool,” said Van Amburgh, who cohosted the discussion with Roger Staubach, the former Dallas Cowboys star and current executive chairman of JLL Americas.

The negotiations with the companies “really wasn’t talking about economics or lease rates,” Amburgh said. “It was talking optimal space, the best price per square [foot], and then allowing [companies] to dictate how development occurred.”

Toyota developed a list of ten to 12 community factors essential to the company before making a decision. These included accessible transportation, education standards, and affordable housing, said Cheryl Hughes, group vice president of corporate resources for Toyota Motor Sales, USA. North Texas checked all the livability boxes, including a “diversity of things to do, diversity of people, diversity of talent,” she said.

Toyota is consolidating most of its U.S. operations in more than 2 million square feet (186,000 sq m) of space under construction in Legacy West. The 255-acre (103 ha) project includes more than 1,000 housing units, which was a key element for Toyota, Hughes said.

“We hear a lot of people want to live close to the office,” Hughes said. “Having housing options was important to the team members.”

State Farm built four buildings with more than 2 million square feet (186,000 sq m) of offices in CityLine, a 187-acre (76 ha) mixed-use development in Richardson, which also wooed defense contractor Raytheon. The development will eventually include more than 4,000 residential units, in addition to 6 million square feet (557,000 sq m) of office space, two hotels, and 300,000 square feet (28,000 sq m) of grocery, restaurant, entertainment, and retail space.

“The community feel that people have always valued here is a big part of the reason” that State Farm chose Richardson, said Rod Hoff, the company’s vice president of operations. CityLine also includes a local train station, a key element for employees, he said. “At the end of the day, it is people who make this work for us,” he said.

Both Legacy West and CityLine offer a wide range of restaurants and retail space within walking distance, offering employees a chance to get out of the office without getting in their cars, executives said. “We wanted the opportunity for our employees to actually experience this live/work/play scenario,” Hoff said.

KDC, which developed both Legacy West and CityLine, had to commit to supplying residential units and restaurants before State Farm would commit, Van Amburgh noted. “They felt like the normal old company cafeteria was a thing of the past,” he said.

JPMorgan Chase chose Legacy West, in part, due to its ability to create some of the energy of a city while still providing employees the quieter and more secure atmosphere of an outlying area.

Legacy West offered an “urban feel in a suburban context,” Arena said. “It is rare in a suburban setting to get an urban feel.”

All the executives stressed that they did not want to be isolated in a traditional suburban campus. They wanted connections to other companies and facilities.

“We wanted a place with a lot of other corporate headquarters,” Hughes said. A strong business infrastructure ensured the availability of services, as well as talent. But the company was also looking toward the family members of Toyota employees, who would be looking for jobs when they moved to the area. “We wanted to make sure [the area] was big enough, diverse enough to meet the needs,” he said.

The companies are using their new headquarters as an opportunity to create new work environments to attract and retain younger workers. Creating new headquarters allows them to design spaces from the ground up.

“We know millennials don’t like being stuck in a cube for eight hours a day,” Hoff said. “They want different places to hang out.”

Toyota is designing its new campus with a 50/50 split between work space and common spaces, Hughes said. “What we found is they want to collaborate more,” he said. “Instead of a person sitting at a desk for eight hours a day, they can find spaces on campus where they can work differently.”

Toyota was specifically looking to develop a headquarters that brought together all the different elements for the next generation of employees, Hughes said.

“It’s not about the work/life balance for millennials, it’s all together,” he said.