IT Company Exodus From California Continues As Digital Realty Relocates To Texas

‘The central location, affordable cost of living, highly educated workforce and supportive business climate have helped make Texas an epicenter for business activity and technology growth,’ says Digital Realty CEO A. William Stein.

Add Digital Realty to the growing list of large IT companies moving their headquarters from California to Texas as the COVID-19 pandemic continues to reshape America’s workforce.

The soon-to-be Austin, Texas-based Digital Realty is leaving San Francisco in a move to boost its presence in Texas with new capital and talent investments, have better affordable living costs for employees and live in a more business-friendly state, according to Digital Realty CEO A. William Stein.

“The central location, affordable cost of living, highly educated workforce and supportive business climate have helped make Texas an epicenter for business activity and technology growth,” said Stein in a statement. “As we continue to make strategic investments to best position Digital Realty for long-term growth, we are confident our expansion in Texas will help us meet the needs of our more than 4,000 global customers.”

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Digital Realty, which made CRN’s 10 Hyperscale Data Center Companies To Watch in 2021 list, owns more than 30 data centers in Texas with more than 4 million square feet and over 100 megawatts of customer capacity.

With the global COVID-19 pandemic causing many companies across the country to create new remote workforces, IT executives are moving headquarters from expensive California cities such as San Francisco.

In 2020, California-based IT giants Hewlett Packard Enterprise, Oracle and Tesla all unveiled plans to move their headquarters from California to Texas. A study by research firm Gartner early in the pandemic found that 74 percent of chief financial officers expected at least some of their employees to work from home permanently after the pandemic eventually ends. They cited the flexibility along with potentially lower costs associated with moving out of large office buildings.

Texas Gov. Greg Abbott said that Digital Realty is joining other global leaders and more than 50 Fortune 500 companies now with headquarters in Texas.

“We are excited that Digital Realty has chosen Texas as the new home for their corporate headquarters, and I thank them for their expanded investment in the Lone Star State,” said Gov. Abbott in a statement Friday. “We are seeing increasing investments from innovative businesses thanks to our young, growing and educated workforce, and our pro-growth economic policies that help job-creating businesses to thrive. … I will continue to promote common-sense policies that create a welcoming business climate and bring even more jobs to the Lone Star State.”

Digital Realty has had roots in Texas since 2002, when it bought 2323 Bryan Street, a major regional connectivity hub in downtown Dallas.

The regional interconnection hub is home to more than 75 carriers, and the company’s new colocation capacity provides a location to deploy Network Hub solutions on Digital Realty’s PlatformDigital. Digital Realty has also invested significantly to bring net-new renewable energy online in Texas, including long-term wind energy and solar agreements. Over 70 percent of Digital Realty’s Texas portfolio will be powered by renewable energy once these projects reach commercial operation by mid-2021.

Digital Realty said it will still maintain a presence in the San Francisco Bay Area.