Tech Sector Site Selection Trends during COVID Pandemic

by King White, on Jul 21, 2022 2:30:00 PM

The tech industry is estimated to be a $1.6 trillion sector in the U.S. with a 35% global market share. Tech sector growth has been fueled by the rapid growth of five prominent technology companies known as FAANG: Facebook (now Meta), Apple, Amazon, Netflix, and Google (now Alphabet) as well as by venture capital and private equity-backed companies. This has created some of the most significant growth and site selection activity in the last decade. The U.S. calls itself home to more than 600 unicorn companies valued at more than $1 billion each, with the majority identified as tech companies that have rapidly expanded around the country.

Tech companies are creating millions of high-paying jobs in sales, software development, software engineering, research and design, customer service, and technical support. The sector continued to be active during the COVID-19 pandemic (COVID) which much greater geographic diversification than seen in the past. Site selection strategies have become more critical to help these companies attract and retain talent in the optimal geographies. To help understand these site selection trends, Site Selection Group has evaluated some of the bigger projects announced since the beginning of COVID.

Geographic diversification pushes the tech industry beyond northern California

Northern California has continued to lose projects due to multiple factors including labor costs, business climate, and economic incentives. Companies are realizing they need to diversify geographically beyond northern California despite it being ground zero for the best tech talent in the world. COVID has amplified the migration as companies began recruiting nationally for work-from-home employees, and labor conditions tightened in Northern California. Cities attracting tech companies include Austin, Texas; Salt Lake City, Phoenix, Boise, Idaho; Dallas, and Atlanta. Labor cost savings can be 20%+ in these cities in Northern California not to mention the tax benefits for both the companies and their employees.

Major site selection announcements since COVID

Site selection activity in the tech sector has continued despite the impact of COVID. Below are some of the notable projects:

  • Oracle announced a massive $1.35 billion site with a plan to create almost 6,000 jobs in Nashville. In exchange, Oracle is receiving an estimated $65 million in economic incentives.
  • LiveView Technologies is investing $328.2 million and creating 3,400 jobs in Orem, Utah. They are receiving an economic incentive package of $17.6 million.
  • CoStar Group, the commercial real estate technology company, announced the creation of over 2,000 jobs in Richmond, Virginia, and is receiving a $15 million economic incentive package to offset its $460 million capital investment.

To help understand where these tech companies have located and expanded, Site Selection Group has identified some of the largest tech projects announced since the beginning of the COVID pandemic.

Largest Tech Project Announcements
March 2020 to July 2022

Company Location Jobs Capex ($M)
Oracle Corporation Nashville, TN 5,989 $1,350.00
LiveView Technologies Orem, UT 3,400 $328.20
Route App Lehi, UT 3,353 $17.30
Fiserv Berkeley Heights, NJ 2,990 $105.00
Domo American Fork, UT 2,230 $30.00
Stripe San Francisco, CA 2,086 $85.00
CoStar Group Richmond, VA 2,000 $460.00
TaxBit Draper, UT 1,700 $70.00
CoverMyMeds Franklinton, OH 1,600 $250.00
Microsoft Atlanta, GA 1,500 $75.00
Fluid Truck Denver, CO 1,483 $0.00
Accenture Federal Services St. Louis, MO 1,400 $0.00
Cerner Corporation Kansas City, MO 1,200 $423.70
Bandwidth Raleigh, NC 1,165 $103.40
Automatic Data Processing Maitland, FL 1,108 $0.10
Brandless Lindon, UT 1,033 $0.50
Infosys East Providence, RI 1,000 $0.00
FanDuel Atlanta, GA 900 $15.00
Datadog New York City, NY 896 $0.00
Medioh Indianapolis, IN 750 $20.50
Deluxe Corporation Sandy Springs, GA 709 $10.00
ASGN Glen Allen, VA 700 $12.40
MOCA Financial Bastrop, TX 700 $10.70
Nymbus Jacksonville, FL 673 $6.40
HCL America Sacramento, CA 663 $4.00
Checkr Orlando, FL 630 $2.70
WellSky Overland Park, KS 593 $0.00
Bluestaq Colorado Springs, CO 585 $0.00
HealthPlan Services Tampa, FL 575 $0.00
Torch.AI Leawood, KS 500 $45.00
Marqeta Denver, CO 500 $0.00

Source: Site Selection Group, IncentivesFlow, Press Releases

Topics:Economic IncentivesSite SelectionCOVID-19Software DevelopmentTechnology



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