Companies announce exodus from Silicon Valley

Pamela Cruz. Peninsula 360 Press [P360P].

The COVID-19 pandemic, which has caused a large number of Silicon Valley technology companies' offices to sit empty, as well as the increasingly high costs of living in California, are some of the reasons why several companies have begun an exodus from this region.

Although 1938, when Hewlett-Packard was founded outside San Francisco, is considered the beginning of Silicon Valley, the truth is that today there is greater dissatisfaction with the high cost of living, the limited availability of housing, as well as high levels of crime.

Although it has been mentioned that some of the main competitors in this Bay Area could be Los Angeles or New York, the state of Texas seems to be capturing the interest of some technology firms, either the city of Houston or in Silicon Hills, just outside Austin.

Since 2013, there has been talk of strong growth in these areas, with many jobs in the sector commonly known as STEM - Science, Technology, Engineering and Mathematics - as well as for its successful medical services export model thanks to the Texas Medical Center cluster.

The state has good universities, such as Rice in Houston and the University of Texas at Austin, as well as a certain tradition of technology companies, since Texas Instrument was founded in Dallas in 1941, just two years after Hewlett-Packard in San Francisco. 

Exodus begins 

In early December, Hewlett Packard Enterprise, which brings together the software and business services activities following the Hewlett-Packard split in 2015, announced that it will move its offices to Houston, which is seen as a major blow in the history of Silicon Valley.

Antonio Neri, the firm's president and CEO, said they have "listened to team members who have said they want to spend less time in a physical workplace. And in response to this new future of work we have reevaluated our real estate strategy."

Its new facility will be a 568,000-square-foot campus in Springwoods Village, north of Houston, which will feature a fitness center and outdoor yoga areas. While the company will maintain an innovation area in San Jose, it will make Houston its business and employment center.

This announcement was joined by Elon Musk, who, last December 10, announced that he was abandoning his residence in Silicon Valley and moving to the state of Texas, due to the "complacency" that has lately taken over the mecca of innovation and technology in the US.

Similarly, he announced his intention to move Tesla Motors' headquarters either to Nevada, where it has a battery factory, or to Texas, where SpaceX operates. 

Another firm that announced a few days ago its intention to relocate is Oracle, which after more than forty years in Silicon Valley, said it will move its headquarters from Redwood City to Austin, an emerging technology hub in the southern United States.

In a statement the firm explains that "we believe these moves better position us for growth and give our people more flexibility over where and how they work." Depending on their position, many employees will be able to choose which office they want to work in. 

These announcements are joined by the moves of Dropbox and Splunk heads Andrew Houston and Douglas Merrit, respectively, to the Austin location, as well as venture capitalist and Palantir co-founder Joe Lonsdale, among others.

People are also leaving the state

According to U.S. Postal Service data, between March and November of this year about 90,000 San Franciscans reported a change of address outside the city, most of them to Florida, Nevada and Colorado.

According to the census estimate, the city had 881,500 inhabitants the previous year, so if this loss is confirmed, it would translate into a population reduction of more than 10 percent, which has not been compensated by the arrival of new residents.

The real estate portal Zillow mentions that the average price of a home can be around 600 thousand dollars in California, although in cities such as Palo Alto or Cupertino, where Apple is headquartered, the price is well over two million dollars.

While data from the Bureau of Economic Analysis, living in California is more expensive than in most U.S. entities, with goods and services costing 15.4 percent more than the national average.