Here are some fun tips to become a local!
COVER STORY
CA TX Texas’ already strong appeal for companies leaving California has been juiced by the pandemic. So what is driving the migration wave?
BY KATHRYN HARDISON, PAGE 11
ABJ ILLUSTRATION; PHOTOS BY GETTY IMAGES, DAN PAWLIK | ABJ
Q JOURNAL PROFILE Kim Roxie is taking all her shots Entrepreneur has learned valuable lessons about believing in herself. 16
REAL ESTATE INC. HQ lands on SoCo
ECONOMIC INSIGHT Cheers to a resilient industry New brewpub epitomizes how beermakers are adapting to the new normal. 8
A prominent venture capital firm that recently moved to Austin from Silicon Valley finds space on South Congress. 7
AUSTIN BUSINESS JOURNAL January 15, 2021 Vol. 40, No. 52, $4.99 504 Lavaca Street Suite 1008 Austin, Texas 78701
Breaking news online AustinBusinessJournal.com Follow us on Twitter @MyABJ Daily email updates AustinBusinessJournal.com/email
r
L
2
AUSTIN BUSINESS JOURNAL
READERS GUIDE
THE BIG NEWS
R PEOPLE IN THE ISSUE
R CONTACT US NEWS TIPS Contact reporters directly, or send news tips to Managing Editor Will Anderson at wanderson@bizjournals.com. SUBSCRIBE Subscribe, make changes to your subscription or get help accessing the digital edition by calling 512- 494-2500. You can also subscribe at AustinBusinessJournal.com/subscribe . ADVERTISE For advertising information, rates, editorial calendar and production specifications call 512-494-2530. AUSTIN BUSINESS JOURNAL STAFF
A-Z Ballard, Jason................... 4 Berners-Lee, Tim............ 23 Boettcher, Tim. ................ 8 Bofenkamp, Meghan....... 11 Boyd Jr., John................. 12 Branch, Taylor................ 23 Breeden, John. ................. 4 Busey, Andrew.................. 5 Carvajal, Carlos. ............... 4 Castillo, Bryand.............. 11 Cherwitz, Richard........... 23 Cleaver, Dean. ................ 15 Cox, Wendell.................. 12 Dasch, Kevin. ................... 5 Diaz, Eliseo. ................... 15 Dickson, Kent................. 14 Flake, Matt....................... 4 Forrest, Hugh................. 14 Furrer, Will....................... 4 Gaddis, Gay.................... 14 Graham, Dan.................... 5 Graham, Lisa.................... 5 Guido, Judith. .................. 9 Harris, Fran.................... 15 Hegar, Glenn. ................... 8 Herman, Tom. ................ 23 Houston, Drew. .............. 13 Huffman, Laura. ............. 13 Hurt, Brett....................... 5 Jensen, Orion................... 5 Karnell, Jeremi............... 15 Khetrapal, Saurabh........... 5
Le Roux, Alex. .................. 4 Long, Buddy..................... 4 Lonsdale, Joe. .................. 7 Loomis, Evan.................... 4 Madole, Garett. .............. 14 Matchett, Tala.................. 5 McWilliams, Jr., W.K.. ....... 3 Mehok, David................... 4 Mervau, Darrell. ............. 11 Milam, Chris................... 23 Moffett, James................. 3 Moore, Audrey. .............. 11 Musk, Elon..................... 13 Nivala, Anntti................... 4 Norwood, Tyler. ............... 8 Poling, Adam.................... 9 Rickel, Josh...................... 5 Rodriguez, Juan.............. 15 Rogers, Jack..................... 8 Roxie, Kim. .................... 16 Rutledge, Kim. ................. 4 Sarkisian, Steve.............. 23 Scholten, Joss. ............... 14 Sheffield, Scott. ............... 3 Stewart, Sumati Sharan. . 14 Stitt, Mike........................ 3 Swerdfeger, Nick. ............. 5 Vallhonrat, Charles........... 8 Van Biene, Nic.................. 8 Vranich, Joseph.............. 12 Weckerly, Grant................ 8 Young, Jim....................... 5
M-Files CEO Antti Nivala has relocated to Austin to oversee the local growth of the Finland-based company.
M-FILES
Creative Services Director Dan Pawlik dpawlik@bizjournals.com 512-494-2540 Staff Photographer Arnold Wells awells@bizjournals.com 512-494-2542 Advertising Director Robert Nusbaum rnusbaum@bizjournals.com 512-494-2530 Advertising Account Executives Blair Trout btrout@bizjournals.com 512-494-2535 Jon Catania jcatania@bizjournals.com 512-494-2509 Eileen Barber ebarber@bizjournals.com 512-494-2533 Product Sales Account Executive Alexis Crowell acrowell@bizjournals.com 512-494-2544 Office Administrator Cheryl Joseph cjoseph@bizjournals.com 512-494-2510 Events Director Jacqui Zuniga jzuniga@bizjournals.com 512-494-2536
Market President & Publisher Heather Ladage hladage@bizjournals.com 512-494-2511 Editor Colin Pope cpope@bizjournals.com 512-494-2521 Managing Editor Will Anderson wanderson@bizjournals.com 512-494-2528 Assistant Managing Editor Paul Thompson pthompson@bizjournals.com 512-494-2520 Research Director Patricia Rogers progers@bizjournals.com 512-494-2527 Staff Writers Mike Cronin mcronin@bizjournals.com 512-494-2524 Kathryn Hardison khardison@bizjournals.com 512-494-2529 Parimal M. Rohit prohit@bizjournals.com 512-494-2523 Editor, Austin Inno Brent Wistrom bwistrom@americaninno.com 316-207-4519
EDITORS’ PICKS The top news of the week, according to the editors: 1. Covid-19 hospitalization rate triggers more business restrictions: Cases and hospitalizations are surging in the region. https://bizj.us/1q86wj 2. DivInc Champions of Change nominees revealed: Read more about these people changing Austin for the better on page 14. https://bizj.us/1q878s 3. New office, hiring in Austin on horizon after M-Files raises $80M: This company's strategy exemplifies how many CEOs see Austin as fertile ground to grow during uncertain times. http://bizj.us/1q88n8 4. Molecula spending fresh millions on hiring, new product: Venture capital continues to flow to innovative companies like this one, and that could help boost the economy as other sectors lag in the rebound. https://bizj.us/1q88hv 5. 21 Austin startups to watch in 2021: Inno will continue to reveal the companies online ahead of Feb. 11 virtual event. http://bizj.us/1q88n2
READERS’ PICKS The top news of the week, according to clicks on AustinBusinessJournal.com: 1. Magnet manufacturer breaks ground on HQ in Round Rock: This story caught fire on social media, as do many of our posts these days concerning companies relocating to Central Texas from California. http://bizj.us/1q88ms 2. Real estate developer Chris Milam pleads guilty to exposing himself to child: This once-high- flying real estate figure was arrested and indicted in 2018. He plead guilty in December. http://bizj.us/1q88mv 3. 21 Austin startups to watch in 2021: This Austin Inno list of companies on the cusp of making it big found a large audience online. http://bizj.us/1q88n2 4. Elon Musk's Neuralink may put roots down in Austin: Originally published Jan. 6, this scoop by ABJ's Kathryn Hardison has continued to get
R COMPANIES IN THE ISSUE
Lyft. .............................. 15 M-Files Corp.. .................. 4 McAlister Assets............... 6 Meanwhile Brewing. ......... 8 New York Stock Exchange. 3 North by Northwest.......... 8 Notley Ventures LLC. ........ 5 O-S Oculus............................. 7 Oracle Corp.................... 13 Palantir Technologies........ 7 Parsley Energy. ................ 3 Perseus Holdings USA LLC. 4 Philips. .......................... 14 Pinoeer Natural Resources.3 Pinthouse Pizza................ 8 Q2 Holdings..................... 4 Railroad Infrastructure Terminal Development...... 6 RCR Rail Park Development.6 RECA. .............................. 7 RentCafe........................ 12 Rockies Venture Club...... 14 Sabot Development. ......... 5 Sjolander Resources and Development. .................. 6 Skull Mechanix................. 8 SmartAsset. ................... 15 Social Starts..................... 5 Spectrum Location Solutions. ...................... 12 Supply Drop Online........... 5 SXSW............................. 14 T-Z T3. ................................ 14 Tesla Inc.. ...............6, 8, 13 Texas Craft Brewers Guild. 8 The Boring Company......... 7 The Boyd Co................... 12 The New Orleans Times- Picayune/New Orleans Advocate. ........................ 3 The Tax Foundation. ....... 12 Truelytics....................... 15 Uber.............................. 15 Union Pacific.................... 6 W.T. Byler......................... 6 Whole Foods. ................... 8 Wish................................ 7 WNBA............................ 15 Yonomi.......................... 14 Zillow............................ 12
7co.................................. 3 8VC. ................................ 7 A-C ABC. .............................. 15 Allegion......................... 14 Altman Development Group.9 Amazing Magnets............. 9 Amazon. ........................ 14 Arrive. ........................... 15 Beam Angel Network. ....... 5 BNSF. .............................. 6 Business Facilities............. 8 Capital Factory................. 5 CBRE Group Inc.. .............. 7 Centene........................... 8 Cushman & Wakefield. ...... 6 D-I Data.world....................... 5 Deliverr. .......................... 7 Deming Center Venture Fund. ................ 14 Demographia. ................ 12 DivInc............................ 14 Dropbox......................... 13 Easy Tiger........................ 3 Electra Beverages........... 15 Epicor Software Corp........ 4 FileTrail. ........................ 11 FlashParking. ................. 15 Flo by Moen. .................. 14 Foot Locker.................... 16 Freeport-McMoRan. ......... 3 Gentex........................... 14 Greater Austin Chamber of Commerce.............. 8, 13 Grön Fuels ....................... 8 H-E-B. ............................. 8 Hims................................ 7 Hive................................. 7 Hold Out Brewing............. 8 HPI Real Estate Services.... 6 Icon Technology. .............. 4 J-N JobSiteCheck. .................. 5 JW Marriot....................... 7 Kazana Ventures LLC......... 5 Khetrapal Family Office..... 5 L Catterton. ................... 15 LAMIK Beauty................. 16 Lazarus Brewing Co.. ...... 11 Lowe’s............................. 6
clicks. http://bizj.us/1q88n3 5. Q2 readies for big office
General contact information 504 Lavaca St., Suite 1008, Austin, Texas 78701 512-494-2500 (phone) 512-494-2525 (fax) austin@bizjournals.com Circulation contact information circhelp@bizjournals.com | 866-853-3661
expansion, overhauls C-suite: The tech company had a big 2020 on the New York Stock Exchange. Read more on page 4. http://bizj.us/1q88n5
R COMING UP
Our annual Bizwomen Mentoring Monday event will take place Feb. 22 from 9-10:30 a.m.
Austin Business Journal is a publication of: American City Business Journals, 120 W. Morehead St., Charlotte, N.C. 28202 Whitney Shaw, CEO; Ray Shaw, Chairman (1989-2009)
R R Jan. 22: Law firms R R Jan. 29: Commercial real estate developers, property managers Email Patricia Rogers at progers@ bizjournals.com if you think your company should be on a list in the coming year.
AUSTIN BUSINESS JOURNAL (ISSN 0892-869X) is published weekly and is the source for business news and information in Central Texas. Offices are at 504 Lavaca Street, Ste. 1008 Austin, Texas 78701. Periodicals Postage Paid at Austin, TX. POSTMASTER: Send address changes to Austin Business Journal, 504 Lavaca street., Ste. 1008 Austin, Texas 78701. SUBSCRIPTION RATES: 1 year, $140, tax included, Current
This year, the networking bonanza will take place virtually, and female professionals will still have the chance to get “face time” with some of the area’s most respected business leaders. For more: bizjournals.com/austin/calendar
single-copy, $4.99, mailed, $8.00. © Austin Business Journal, 2021.
Helping your business through uncharted territory.
OUR BUSINESS IS PROTECTING YOURS. LET'S TALK. 512.477.5000 CSTRIAL.COM
3
JANUARY 15, 2021
UP FRONT
R EVEN MORE NEWS HITTING THE AUSTIN BUSINESS SCENE
signed a five-year lease.
wider opening the following week. When Easy Tiger closed on Sixth in September, CEO Mike Stitt pledged to eventually return to the downtown area “in a way that’s really unique and special.” “It’s not a matter of if, it’s a matter of when and how,” Stitt said at the time. The new site — the former home of event venue 7co — offers a unique layout close to the Central Business District, Stitt said. Its 15,000 square feet of outdoor space were particularly appealing to Easy Tiger, which has
EASY TIGER BRINGING BREAD, BEER TO EAST AUSTIN Easy Tiger Bake Shop & Beer Garden is setting up shop in East Austin. Months after departing its original location on East Sixth Street, where the company launched in 2012, Easy Tiger is returning to the core of urban Austin with a new, roughly 20,000-square-foot location at 1501 E. Seventh St (pictured at left). The new location is expected to have a soft opening on Feb. 3, with a
Rent will be higher than at its Sixth Street location, but there is considerably more space at the tree- lined building on East Seventh, where Stitt hopes Easy Tiger will be able to “borrow on the mystique and charm and magic” of the original. The East Seventh location is expected to have about 60 employees when it opens, bringing Easy Tiger back to its pre-pandemic headcount of about 180. — Paul Thompson
SYDNEY GAWLIK
PROMINENT UT ALUM SUCCUMBS TO COVID-19
James Moffett, a longtime energy and mining executive who’s remembered in Austin for donating millions of dollars to the University of Texas and for a controversial real estate project, died Jan. 8 after contracting Covid-19. He was 82. The New Orleans Times-Picayune/New Orleans Advocate reported that Moffett’s son, Bubba, said he died of Covid-19 complications. He had been ill for several years. Moffett spent nearly two decades as CEO of Phoenix-based mining giant Freeport-McMoRan Inc. He died at his home in Austin. Moffett, a Louisiana native known as “Jim Bob,” was a graduate of the University of Texas at Austin, where he played football and studied geology. In the 1980s and ‘90s, Moffett clashed with environmentalists over plans to develop thousands of acres in Southwest Austin, through Freeport’s FM Properties spinoff. That fight ultimately lead to the creation of Save Our Springs Coalition, a powerful environmental group. Moffett gave extensively to his alma mater, UT, although that too came with some controversy over Freeport- McMoRan’s mining practices. Moffett and his wife donated $2 million for a renovation of UT’s football stadium and $2.5 million for a $30 million molecular biology building that bears their name, the Austin American- Statesman reported. — Jeff Gifford and Will Anderson $4.5B BUYOUT FINALIZED FOR PARSLEY ENERGY Pioneer Natural Resources on Jan. 12 completed its $4.5 billion buyout of Austin-based Parsley Energy Inc., after shareholders of both companies approved the merger. That means Parsley will no longer be traded on the New York Stock Exchange, and that the Texas capital has lost one of its few prominent energy headquarters. Pioneer (NYSE: PXD), based in the Dallas suburb of Irving, announced plans to buy Parsley in October. Including Parsley’s debt, the deal is valued at about $7.6 billion. Parsley stock owners will receive 0.1252 shares of Pioneer for each share they had of Parsley. “We are excited to close our transaction with Parsley and begin delivering on the significant synergies provided by this combination,” Pioneer CEO Scott Sheffield said in a statement. “We appreciate the strong support from shareholders and are confident in the tangible and durable value created through this transaction, forming the premier Permian independent energy company.” — Will Anderson
Progressive Casualty Ins. Co. & Af liates. Business and Workers’ Compensation coverage provided and serviced by af liated and third party insurers.
So Progressive offers commercial auto and business insurance that makes protecting yours no big deal. Local Agent | ProgressiveCommercial.com Small business is no small task .
4
AUSTIN BUSINESS JOURNAL
TECH FLASH BY MIKE CRONIN
I
MCRONIN@BIZJOURNALS.COM
512-348-8062
@ABJTECH
FINTECH
RR CAPITAL REPORT
$80M M-Files Corp., a Finland-based software maker with its North American headquarters in Austin, announced the funding Jan. 12. The company developed an information management platform that “improves business performance by helping people find and use information more effectively,” according to the announcement. The company said it made Austin its North American hub in December 2019 and that CEO Antti Nivala and other executive team members are based in the Texas capital. $7M Icon Technology Inc. reported Jan. 5 it had raised the capital from 17 investors, according to a filing with the U.S. Securities and Commission. Icon is known for its 3D printer for homes and its new, automated construction system, dubbed the Olympus Construction System, will be “versatile,” CEO Jason Ballard said, able to build structures, such as “roadways, launching and landing pads and pressurized habitats” on the moon. Icon CEO Ballard, Alex Le Roux and Evan Loomis co-founded the Austin startup in 2017. ICON TECHNOLOGY Rendering of types of structures Icon Technology Inc. could help NASA build on the moon.
ARNOLD WELLS / ABJ
Q2’s new office is rising next to its existing buildings in Northwest Austin, not far from Lakeline Mall.
Q2 READY FOR NEXT GROWTH SPURT generated about $293.8 million in reve- nue, up from $228.6 million during the same period last year, a 28.5% increase, according to a Nov. 5 SEC filing.
P andemic-taught lessons contin- ue to inform the approach Q2 Holdings Inc. executives are tak- ing as they build out the company’s new 130,000-square-foot office building next door to the company’s current North Aus- tin headquarters. “The entire building, in every place, we’ll be able to either cut in half or double in size,” said Kim Rutledge, Q2 executive vice president for people. Her responsi- bilities include overseeing the company’s human resources, facilities and real estate. “We’re making sure this will be a destina- tion that our employees want to come to.” That is, once company employees phys- ically return to working in the office. President and CEO Matt Flake said the company decided in early March to move its roughly 1,800 employees to remote work. Q2 (NYSE: QTWO) completed that task within a week, Flake said. Q2 employed 1,574 as of Dec. 31, 2019, accord- ing to its February annual report. Founded in 2004, Q2 went public in 2014. Q2 develops software for financial institutions that facilitates digital bank- ing and lending. Upon the new building’s opening at 10355 Pecan Park Blvd. in June, Q2 will boast about 325,000 square feet in the Aspen Lake business park, which is near With fresh faces in C-suite, NYSE-listed company eyes billion-dollar goal
The company’s stock was the 10th-best-performing this past year among Austin public companies, with shares closing Dec. 24 at $128.13, up 56.6% from the start of the year. John Breeden on Dec. 9 became the company’s first-ever chief operating offi- cer, a promotion fromhis former position as executive vice president of operations. Breeden has been with Q2 since 2011. The company also promoted Lou Sen- ko, formerly chief information officer, into a new position called chief availabil- ity. That position is responsible for ensur- ing that Q2’s vast system — Flake said it boasts 17 million users — remains “avail- able to everyone, no matter who’s using” it, the CEO said, citing examples such as those seeking stimulus-check deposits or automated clearing houses. Q2’s board on Dec. 4 hired Carlos Car- vajal as the company’s chief marketing officer, according to a Dec. 10 SEC fil- ing. Carvajal takes over that role from Will Furrer, who had been the compa- ny’s CMO and chief strategy officer for the past year. He remains chief strategy officer, a position he’s held since 2016. David Mehok is Q2’s new chief finan- cial officer. Mehok most recently served in the same role for about three years at Austin-headquartered Epicor Software Corp., which makes enterprise resource planning software. For more: https://bizj.us/1q8515
Kim Rutledge
Matt Flake
the confluence of U.S. Highway 183 and the State Highway 45 toll road. Company executives plan that the exec- utive briefing center and internet opera- tions center will be on the first floor, as well as marketing and corporate ser- vices. The second floor will be home to the finance, human resources and legal departments. The newbuilding “will hold about 650” employees, the same amount as the other 129,000-square-foot building Q2 leases in Aspen Lake, Rutledge said. The company recently made a spate of executive-team moves. “We’re structuring the business to become a billion-dollar software compa- ny,” Flake said. “We had an amazing year. We delivered on things in a special year.” The personnel actions come at the end of a year in which it projects generating roughly $400 million in revenue in 2020, according to a Nov. 4 filing with the U.S. Securities and Exchange Commission. For the nine months that ended Sept. 30, Q2
$2.05M
Perseus Holdings USA LLC reported Jan. 7 it had raised the capital from 20 investors, according to a regulatory filing. The capital came in the form of “debt which is convertible into equity based on the occurrence of certain events” and pooled investment fund interests, according to the filing. The vaccine platform technology marketing company in June 2017 reported raising $1.1 million. It is led by President and CEO Buddy Long.
5
JANUARY 15, 2021
COMPANY TO WATCH
PROMINENT INVESTORS HELP JOBSITECHECK TAP INTO WIDER MARKET Initially conceptualized as a digital Covid-19 safety protocol for construction sites, JobSiteCheck Inc. has since
worker scans a QR code if the worker has a smartphone, answers questions that appear on the smartphone and the screen goes green to indicate the worker has cleared the check and may begin the day. If the screen turns red, that worker is prohibited from working. Workers without a smartphone may answer the questions with a pen and paper. The system automatically integrates local regulations to ensure the job site is in compliance. But Rickel and Matchett envision JobSiteCheck being a key offering for a wider variety of companies as the pandemic-caused habit of checking in to places of business becomes permanent. The startup’s solution is unique because it’s worker-driven, rather than a simple digitization of an existing top-down management process, Matchett said. “There’s a lot of momentum around the behavioral shift we’ve tapped into from a health-screening standpoint,” the president said. Investors seem to agree. Already backed by Dan Graham, JobSiteCheck now counts among its investors: Data. world Inc. co-founder and CEO Brett Hurt; Capital Factory; the Beam Angel
positioned itself as a “system of record” that aims to improve project efficiency, cost-effectiveness, worker productivity and health. With new leaders at the helm, the Austin-based startup also already has begun to expand its market to sectors including education, manufacturing and municipal government. And, JobSiteCheck has raised roughly $600,000 of a planned $750,000 capital raise that CEO Josh Rickel said the business “is close to finishing out.” He and President Tala Matchett formally assumed their positions at the company at the end of June. The two partners at Notley Ventures LLC, an Austin investment firm co-founded by Lisa Graham and Dan Graham that backs social-impact companies, replaced Orion Jensen and Nick Swerdfeger, who launched JobSiteCheck in April. The startup has created a survey for construction workers to answer upon arriving at a job site to help reduce the possibility of coronavirus infection. Each
JobSiteCheck allows workers showing up at a job site — or any kind of workplace — to scan a QR code and take a survey designed to reduce the spread of disease. GETTY IMAGES
Kazana Ventures LLC investment firms; Kevin Dasch, partner at San Francisco- headquartered venture capital firm Social Starts; and Jim Young, managing partner of Austin commercial real estate firm Sabot Development Ltd. For more: https://bizj.us/1q85yw
Network, an angel investing network launched in August that funds female- founded startups headquartered in the Lone Star State; Supply Drop Online Inc. co-founder and CEO Andrew Busey; Saurabh Khetrapal, founder and managing partner of the Khetrapal Family Office and
Why some CEOs go further and higher
As a business leader, you know that the hardest climb isn’t Kilimanjaro, Denali or Everest. It’s the CEO’s leadership journey, and it’s fraught with all kinds of challenges and opportunities, setbacks and advances. The good news is you don’t have to go it alone. You can travel with an experienced guide who knows the lay of the land and an elite team of peers who’ve got your back. You can equip yourself with world-class resources to navigate changing environments and uncertain conditions. You can take an approach forged over 60 years and traveled by 100,000+ CEOs of small to midsize businesses around the world. With that kind of support, how high could you ascend? If you’re ready for the climb of a lifetime, the path starts here. Learn more at vistage.com.
CEO ClimbersWanted Join a team of peak performers and take your business and your leadership to a whole new level. Start with your FREE guide: Journey to the Summit The CEO’s 7 Laws of Leadership
Visit vistage.com/climb.
6
AUSTIN BUSINESS JOURNAL
REAL ESTATE INC. BY PARIMAL M. ROHIT
I
PROHIT@BIZJOURNALS.COM
512-494-2523
@PARIMALROHIT
RARE RAIL SITE FOR SALE INDUSTRIAL
A chunk of what’s billed as the largest rail park in the Austin area has just hit the market. Now up for sale are 350 acres of the 750-acre RCR Taylor Logis- tics Park in Williamson County. The industrial park’s developer, RCR Rail Park Development Co., is seeking end users or other devel- opment firms interested in build- ing warehouse space next to the class I railroads that converge at the site. The 350 acres would be avail- able for most industrial uses, such as distribution, manufacturing or transloading of lumber, plastics or food. The remaining 400 acres at the park comprise rail lines, roads, storage for automobiles and oth- er infrastructure. Manifest, rail car storage and unit train services are also available. Rail and non-rail commercial sites are available at the site, which is betweenHutto and Taylor, about 35 miles north of downtown Aus- tin. A developer — or developers — could build warehouses as small as 50,000 square feet or larger than 1 million square feet. A representative for RCR Rail Park said the developer has been in talks with a freezer storage 30 YEARS OF CHANGE IN AUSTIN HOUSING MARKET DATA SNAPSHOT Here’s a quick comparison of the average and median prices for homes in the Austin metro for November 1990 versus November 2020. Once a contender for Tesla factory, rural site could attract big user
Taylor
79
Williamson
MAPS4NEWS
2020 was $10.57 per square foot, according to Cushman & Wake- field. For warehouse/distribution centers, it was $9.65. Industrial and warehouse development is becoming more commonplace in the outlying areas of metro Austin. Lowe’s leased about 119,000 square feet in Kyle during the third quar- ter. Amazon is pursuing a new 1-million-square-foot ware- house in San Marcos and has leased space this year in Round Rock and Kyle, in addition to the 3.8-million-square-foot ware- house it has under construction in Pflugerville. A large industrial park, Cross- roads Logistics Center, is being developed by HPI Real Estate Ser- vices and Investments in North east Austin. It could eventually span 1.6 million square feet. Tesla in July announced it would build a $1.1 billion facto- ry near Austin-Bergstrom Inter- national Airport and pledged to create 5,000 jobs.
RITD, RTR RAIL PARK DEVELOPMENT CO.
tin-area factory. The two railroads at the park are used by BNSF and Union Pacific. Other features at the site include a transload park and direct access to U.S. Highway 79. The State Highway 130 toll road is about six miles away, to the east, while I-35 is about 10 miles west. Industrial has been one of the hottest real estate asset classes during the pandemic, with com- panies leasing up tons of space to help meet demand for e-com- merce. Cushman & Wakefield, in a recently published report, stated distribution center development in Austin is “a hot commodity.” The average net rental rate for all property types in the Aus- tin area in the third quarter of
company and negotiating other contracts, but no agreements or deals have been finalized. The spokesman added the com- pany won’t allow any uses on the property involving hazardous materials. The park could support companies in the buildingmateri- als, food, polymer, resin and steel industries. W.T. Byler, Sjolander Resources and Development, Railroad Infra- structure Terminal Development and McAlister Assets were all involved in the rail park, as well. While it is on the periphery of the Austin metro, RCR Taylor Logistics Park was considered a viable site for Tesla Inc. last year, when the electric carmaker was scouting locations for an Aus-
The 750-acre RCR Taylor Logistics Park is planned in Williamson County, east of Hutto and west of Taylor. Acreage is now for sale to allow warehouses as small as 50,000 square feet or larger than 1 million square feet.
NOVEMBER 1990
BY THE NUMBERS
$84,117
1990 SALES: 558
TOTAL LISTINGS: 3,942 TOTAL LISTINGS: 2,831*
$163,600 in 2020 dollars
$71,000
$138,088 in 2020 dollars
2020 SALES: 3,392
NOVEMBER 2020
■ Average price ■ Median price
$462,812
* listings were at 6,236 in April 2020 but have dropped sharply since pandemic started
$363,750
SOURCE: TAMU Texas Real Estate Research Center
7
JANUARY 15, 2021
8VC SECURES SPACE ON SOUTH CONGRESS AFTER HQ MOVE IN BRIEF
RECA SCHEDULES KNOCKOUT NIGHT FOR OCTOBER
WAREHOUSE DEMAND REMAINS STRONG
Demand for distribution space in Austin remains high. An industrial market report for the fourth quarter of 2020 shows tenant demand for distribution space was a net positive for a 26th consecutive quarter or six and a half years. The average asking rate was up 29 cents per square foot, quarter over quarter, to $10.17 per square foot, according to the report from CBRE Group Inc. “Large block distribution space continues to attract the attention from users throughout the metro, and as available space continues to decrease, users will potentially need to adjust their space requirements to fit their needs,” the CBRE report stated. The area has 15 industrial projects under construction right now, totaling 1.56 million square feet of space, according to CBRE. Three deliveries were made during the fourth quarter. Georgetown had the highest availability rate (17.7%) for industrial space last quarter, followed by Hays County (16.3%), East Austin (15.2%) and Round Rock (11%). Hays County had the most industrial space under construction (534,058 square feet), followed by Southeast Austin (422,666) and Georgetown (331,030).
AVAILABILITY RATES
In 2021, one of the biggest annual fundraisers for Austin’s real estate sector — the Real Estate Council of Austin’s KnockOut Night — will be held at a different time of year than usual. This year’s black-tie event, which coincides with RECA’s 30-year anniversary, will be held Oct. 7 at the JW Marriott at 110 E Second St. RECA usually holds its annual networking event in February. KnockOut Night typically features a combination of private cocktail parties, a networking “main event,” dinner, amateur boxing matches and afterparties. Those fighting in the ring are RECA members and undergo training for months prior to the event. Other event highlights include casino- style gaming and entertainment. The annual event attracts the top players in Austin’s real estate scene. The rescheduling of KnockOut Night underscores how Austin business leaders are eying the resumption of large, in-person gatherings in the second half of 2021.
A prominent venture capital firm that relocated to Austin from San Francisco has signed an office space deal on South Congress Avenue, according to sources. One source familiar with the deal
17.75% Georgetown had the highest availability rate (17.7%) for industrial space in Q4 2020 16.3% Hays County 15.2%
Joe Lonsdale
said 8VC leased 10,000 square feet space at 1221 South Congress Ave. The building is just south of, but not part of, the Music Lane mixed-use campus. 8VC is a technology-focused venture capital firm. It was started in 2015 by Joe Lonsdale, known as one of the co-founders of software company Palantir Technologies. Some of the companies 8VC has invested in include The Boring Company, Deliverr, Hims, Hive, Oculus and Wish. The company’s website still lists its main office in San Francisco, but 8VC announced in November 2020 it would be relocating its headquarters to Austin.
East Austin 11% Round Rock
SOURCE: CBRE
8
AUSTIN BUSINESS JOURNAL
ECONOMIC INSIGHT BY KATHRYN HARDISON
I
KHARDISON@BIZJOURNALS.COM
512-494-2529
@ABJGOVERNMENT
IN BRIEF
Beermakers buck pandemic trends CONSUMER GOODS
CHAMBER WINS DEAL OF THE YEAR FOR TESLA PLANT The Greater Austin Chamber of Commerce was honored with the 2020 Deal of the Year Gold Award from Busi- ness Facilities for helping to bring the Tesla gigafactory to Travis County. The award, announced Jan. 6, highlighted the 5,000 jobs Tesla has pledged to create at the $1.1 billion fac- tory, which is rising rapidly near the State Highway 130 toll road and Harold Green Road. Jack Rogers, editor in chief of Business Facilities, said the plant “vaults Austin into the top tier of automo- tive manufacturing hubs.” Manufacturing experts have told Austin Business Journal that Tesla could actu- ally bring significantly more than 5,000 jobs to the Austin area, especially if it establish- es a large battery production unit here. And the chamber estimates for every one job created by Tesla, four indi- rect and induced jobs will be created, such as at suppliers moving to the area or at local firms staffing up to service the factory. The gigafactory is slated to produce Tesla’s Model Y crossover vehicle and Model 3 lower-priced car, as well as its new Cybertruck and its Semi tractor-trailer. Tesla has indicated it will have the plant up and running in 2021. The Austin chamber beat out a $9.2 billion Grön Fuels complex in Baton Rouge, Louisiana, and the regional headquarters for managed care company Centene in Charlotte, North Carolina, which is expected to create 3,237 jobs. — Will Anderson
BY PAUL THOMPSON pthompson@bizjournals.com W ith revenue down more than 20% during the Covid-19 pandemic and construction underway on a mul- timillion-dollar fourth location, Pinthouse Pizza had to do some- thing drastic for the sake of the business: start selling its beer in grocery and convenience stores. Over the summer, the compa- ny struck a deal with grocers such as H-E-B andWhole Foods tomake its first foray into retail sales, begin- ning with cans of its popular Elec- tric Jellyfish IPA. Retail sales have been “crushing” ever since, saidNic VanBiene, Pinthouse Pizzamarket- ing director and co-owner. “We’ll be expanding on that a little bit in the coming weeks and months, too,” he said. “It’s relative- ly significant. It helpedus notmake tougher decisions.” Pinthouse Pizza was started in 2012 as a single brewpub onBurnet Road. It became known for com- bining tasty pies with its own beer and expanded to additional loca- tions in South Austin and Round Rock. Pinthouse never intended to sell its beers in retail stores, but lead- ers felt like they had to pivot over the summer “to keep these brew- eries going at full speed,” said Grant Weckerly, director of sales. The decision opened a new reve- nue stream and helped keep the company viable as it worked on ambitious renovations for its new location. “We’re probably selling, on aver- age, about 500 cases a week in the off-premise channel,” Weckerly said. “We’ve been really fortunate; everything we’re making sells out every week. So we have this almost model of guaranteed freshness.” Weckerly added that grocery stores account for roughly 80% of Pinthouse’s off-premise sales. Though Pinthouse Pizza brief- ly shut down its locations and fur- loughed employees at the start of In a resilient industry, Pinthouse stands out with new brewpub, expanded distribution
PAUL THOMPSON / ABJ This is what guests see when they walk into the taproom at the new Pinthouse Brewing.
the pandemic, it has now brought backmany of those jobs, said prin- cipal and operator Tyler Norwood. It has also added dozens of people to staff up its new brewpub at 2201 E. Ben White Blvd., which opened Jan. 6 in an old dance hall.The new location brings the company’s total headcount to about 270 employees, and Pinthouse is currently hiring for multiple positions across the chain. Pinthouse Pizza’s new brew- pub bucks a trend of closures for brick-and-mortar food and bev- erage businesses during the pan- demic, which has claimed some of Austin’s iconic bars and restau- rants. But the craft beer industry has been pretty resilient: the Tex- as Craft Brewers Guildhas recorded only eight closures across the state during the pandemic, according to TCBG Executive Director Charles Vallhonrat. He noted changes to regulations — like making it easier for bars and breweries to operate as restaurants — have helped out. “Luckily our closure rates are nowhere near what the expecta- tion was,” Vallhonrat said. “There have not been as many as we anticipated.” At the same time, 48 businesses joined the guild during 2020, Val- honrat said, only a slight dip from the 51 new members that joined TCBG in 2019. Breweries that have opened in Austin in the past year include Hold Out Brewing in Clarksville andMeanwhileBrewing in Southeast Austin.
“We’ve been really fortunate; everything we’re
Yet the industry has seen clo- sures, with Austin businesses such as Skull Mechanix and North by Northwest shutting down in 2020. The craft beer industry had a $5 billion impact on the Texas econ- omy in 2019, according to TCBG data. At the time, there were 341 craft breweries and brewpubs operating in Texas, which support- ed nearly 32,000 full-time jobs. The more than $6 million price tag for Pinthouse’s ambitious ren- ovations at the Ben White Boule- vard location marks a significant investment at a time when many are tightening their belts. The nearly 30,000-square- foot location will be Pinthouse’s first that doesn’t serve the brand’s trademark pizza. Rather, the loca- tion is more of a traditional micro- brewery tasting room, with an expansive bar andmore than 5,000 square feet of covered patio space. There is also a second-story bar area upstairs that can house up to 95 people. Pinthouse plans tomake the space, which features a catwalk above the brewery floor, available for private parties and events. “I think we just want to try new things. We like exploring,” Van Biene said of the company’s deci- sion to move away from pizza at its fourth location. “You’ve still got the same great Pinthousebeer, but it’s a wholenewfoodmenutocheckout.”
making sells out
every week. So we have this almost model of guaranteed freshness.” GRANT WECKERLY, Pinthouse director of sales
$112.5B
State of Texas revenue estimate for general-purpose spending in 2022-23, according to a Jan. 11 report from Comptroller Glenn Hegar. That represents a 0.4% decrease from 2020- 2021, which Hegar’s office attributed to the Covid-19 pandemic. Lawmakers face a roughly $1 billion budget shortfall, significantly less than expected. For more: https://bizj.us/1q878t
To see a slideshow of the brewpub: http://bizj.us/1q87tt
9
JANUARY 15, 2021
MANUFACTURING
Central Texas’ magnetism: Region lands another HQ
A California-based magnet manufac- turer and distributor is investing $5.5 million into a new headquarters in Round Rock. Constructionstarted Jan. 7onAmaz- ingMagnets LLC’s 40,000-square-foot facility on 1.8 acres in the Altman Busi- ness Park. It’s one of the first company relocation announcements to be made this year for the Austin area, following a banner 2020 when companies con- tinued to flock to Central Texas, help- ing to offset the losses seen in sectors such as retail. Amazing Magnets has already start- ed its relocation from Anaheim, Cal- ifornia, to the suburb north of Aus- tin, company founder and CEO Tim Boettcher said. The company is tem- porarily operating out of a space about four miles south of the future headquarters, which will be at 1992
Meadow Lake
ALTMAN DEVELOPMENT GROUP
35
Amazing Magnets broke ground on its Round Rock headquarters on Jan. 7.
nets hasn’t tapped any local economic incentives, Boettcher said. The compa- ny purchased the 1.8 acres late last year, and the deal was brokered by Colliers International. By the end of the year, the compa- ny expects to have 25 employees in Round Rock, with plans to double its team in 2022. Most of the company’s current staff are moving to Texas, said Adam Poling, with only a handful stay- ing in California. Poling said the com- pany wants to hire for roles in market- ing, operations, warehousing and sales. For more: https://bizj.us/1q85lv
company will host events to educate the community on topics like its operations, industry trends and business tips, said JudithGuido, executive vice president of strategy and marketing. Like many other California compa- nies, Boettcher said the business was driven away from the West Coast in part due to high taxes, burdensome business regulations and the high cost of living. The Austin area’s comparatively lowcost of living and talent pool, plus the state’s business-friendly climate were among the ultimate deciding factors for the company’s relocation. Amazing Mag-
MAPS4NEWS
SteamWay, off I-35. Amazing Magnets works with companies in the automo- tive, clean energy, entertainment and defense sectors to design, develop and distribute magnetic products. The facility, which includes office and warehouse space, is slated to be complete by the end of August. Alt- man Development Group is the devel- oper and architect of the facility. Plans include space for a theater where the
Join us for an in-depth webinar with expert panelists discussing current and future economic development activity in Texas.
ROBERT ALLEN President & CEO, Texas Economic Development Corporation
HOLLY SULLIVAN Head of Worldwide Economic Development, Amazon
JUBAL SMITH Managing Director and Leader of JLL’s Location Economics Practice, JLL
Register for this virtual event at: bizj.us/1q80kh
10
AUSTIN BUSINESS JOURNAL
THE FUTURE OF CI T I ES VIRTUAL EVENT + PANEL DI SCUSS ION Building Innovative & Resilient
Cities WI TH RICHARD FLORIDA FOUNDER OF THE CREAT IVE CLASS GROUP
PHOTO BY DARIA MALYSHEVA
On January 28th, Richard Florida, a renowned urbanist and thought leader on the sustainability of America’s cities, will share his expertise on the opportunities and difficult choices ahead for the country’s major cultural and economic centers as they navigate unprecedented challenges amid a global pandemic.
January 28, 2021
Save your spot. 12:00 PM – 1:30 PM
REGI STER TODAY AT: www.bizjournals.com/futureofcities
PRESENTED BY
with Richard Florida and Baltimore Business Journal Editor, Joanna Sullivan F IRES IDE CHAT
Q&A SESS ION with questions from Business Journal readers nationwide
PANEL DI SCUSS ION with local experts and business journal moderator
LOCAL SPONSORS
11
JANUARY 15, 2021
COVER STORY
WHY RELOCATE? The real cost difference between California and Texas explained FileTrail CEO Darrell Mervau, second from right, moved the company to Austin to improve employees’ quality of life. From left are Marketing and Administrative Assistant Audrey Moore, Director of Professional Services Meghan Bofenkamp and Project Manager Bryand Castillo. ARNOLD WELLS / ABJ
BY KATHRYN HARDISON khardison@bizjournals.com
leaving California in recent years — high taxes and burdensome business regulations, to name a few—Mervau said the driving factor for FileT- rail was to find a city that could provide better opportunities for its people. “My employees were constantly saying, ‘Look, my commute is horrible, and my rent is astronomical for what I’m getting,’” he said. “And to be perfectly honest, I also told them, ‘I’m not going to pay you $400,000 a year so you can buy a house in Silicon Valley.’ “So, we were really looking at improving their lives and moving somewhere where they could start accumulating assets.” That, ultimately, has been the driving factor for many companies leaving Silicon Valley and looking to areas such as Austin, which remains a top market because of its business climate, comparatively low cost of living and its large talent pool, according to site selectors.
Texas has been a magnet for company relo- cations and expansions for some time. For eight straight years, the state has ruled supreme in the Governor’s Cup rankings produced by Site Selectionmagazine for total capital invest- ment by state. Now that trend appears to be accelerating because of cost concerns in coast- al states as well as the sudden upheaval of the pandemic. So, as companies trade in the beaches of California for the Texas Hill Country, it begs the question: What’s the actual cost difference between the two states? On a narrower level, what opportunities does Austin provide over Silicon Valley? And the crystal ball question: How can Austin manage its fast-paced growth so that it doesn’t become the next Silicon Val- ley in 10 years?
T he writing on the wall was clear for Dar- rell Mervau in 2018 —he couldn’t provide his employees the lives they wanted in Silicon Valley. It took time for Mervau to find the right place to relocate his software company, File- Trail Inc., which was then based in San Jose and had grown California roots for 20 years. The short list was Phoenix, Nashville or Austin. The decision to move to the Texas capital was an easy one, he remembered, adding it was shared with a team of employees in January 2020 over a round of beers at Lazarus Brewing Co. A few months later, the company would relocate its headquarters just half a mile away from that brewery in East Austin. Of all the reasons companies have cited for
CONTINUED ON PAGE 12
12
AUSTIN BUSINESS JOURNAL
IF YOU’RE GOING TO (LEAVE) SAN FRANCISCO
COVER STORY
can’t be,” said Vranich, consultant with Spec- trum Location Solutions in Pennsylvania. Vranich said his clients typically save 15% to 30% on taxes by moving to Texas. Other cost savings also vary based on what city a compa- ny chooses in the Austin metro and the com- pany’s business model. Meaning, a company looking for space in downtown Austin might not see the same savings as those looking in Round Rock, and those that are labor-inten- sive will see more savings in salary costs. Those have been the most apparent sav- ings for FileTrail so far, said Mervau. After less than a year in Austin, he’s already doubled his employee count to 40 people — and the com- pany has still reduced its salary costs by 25%. FileTrail hasn’t finished its first tax cycle yet, but Mervau expects those costs to also be in the company’s favor. Seeking greater quality of life Austin is known for its nightlife and live music, but those aren’t the biggest factors weighing on executives considering how to improve employees’ quality of life. Instead, it’s that housing expenses in Aus- tin are more than cut in half compared with San Francisco, and employees spend less time in their cars to get to their jobs. And it’s the lack of income tax and the ability to start sav- ing money, site selectors said. For comparison, the typical home value in San Francisco is $1.38 million and the average apartment rent is more than $3,000 a month, according to data from Zillow and RentCafe. com. In the city of Austin, the typical home value is closer to $438,000 and monthly rent is roughly $1,400. “Corporate income taxes are important, but really, personal income taxes play amajor role in site selection decisions today, because com- panies are only as good as the people,” Boyd said. At FileTrail, Mervau said his employees have described the move to Austin as a sub- stantial raise because their take-home pay is much higher in comparison. Since moving here last spring, several of his employees have purchased their first home — amilestone near- ly impossible back in Silicon Valley. The housing affordability crisis in Califor- nia is the main reason that the Golden State’s population has actually started to shrink, said Wendell Cox, principal of St. Louis-based international public policy firm Demograph- ia. According to the U.S. Census Bureau’s 2020 population estimates, Texas added the most residents of any state last year, while Califor- nia’s population lost an estimated 69,532 res- idents — the first negative population change for theWest Coast state since at least 1900, the earliest available data. Cox said California’s rising housing prices mean many people who work in the Bay Area live in communities an hour or more away, where housing still costs 1.5 times as much as in Austin, and twice as much as in Dallas or Houston. Just to be able to qualify for a typ- ical loan on a house in San Jose, that house-
CONTINUED FROM PAGE 11
Many executives point to increased quality of life for
An era of cost-cutting Businesses generally save 20% on over- all costs by making the move from California to Texas, said John Boyd Jr., principal at site selection consulting firmThe Boyd Co., based in New Jersey. Taxes are obviously a big factor in this, but Boyd also pointed to the savings from operat- ing costs such as leasing commercial real estate and payroll. Companies even save on utilities for an office space, with costs in Austin about half what businesses pay in San Francisco. “Companies save tremendous amounts of money with taxes and operating costs in Aus- tin versus the Bay Area in California, and also labor costs,” he said. For both states, the types of taxes and rates vary based on the business, which makes the complete tax picture a bit complex. When it comes to income, combined feder- al and state corporate taxes total roughly 28% in California and 21% in Texas, thanks to the limited taxes in the Lone Star State, according to a report from The Tax Foundation. That’s not to say businesses don’t pay taxes in Texas — there’s a franchise tax, plus taxes for specific industries. California also has a franchise tax and an alternative minimum tax. However, site selectors said the lack of per- sonal income tax is huge for both businesses and their employees in Texas. It is important to note that property taxes are higher in cities across Texas — about 2.2% in Austin — to help make up for the lack of income tax to fund government services. Other booming mar- kets, like Tennessee or Arizona, have average property tax rates lower than 1%. To the dismay of many California CEOs, state lawmakers were considering another tax hike for millionaires by press time to help fund homelessness efforts — a move that Boyd said will accelerate the exodus from the West Coast. “Every company with a major presence in California right now — it’s not even an over- statement to say this — their board of direc- tors are, as a matter of due diligence, explor- ing options as a way to be accountable to their shareholders,” Boyd said. On average, an employer in the Bay Area can save about 15% to 20% in annual payroll costs by moving to Austin, Boyd said, though he warned that gap is beginning to narrow as more companies rush to Central Texas. “The trend is clearly companies are reduc- ingwages with thesemoves to lower cost mar- kets with lower costs of living,” he said. “The market is just on fire right now, and it’s begin- ning to shrink labor cost savings.” Site selector Joseph Vranich — whose spe- cialty is companies leaving California — said he expects to have a record amount of business in 2021 as companies leave the West Coast for several reasons, including proposed tax hikes. He said it ultimately comes down to politics. “Can it get any better? I’ve tried to be an optimist ... but when it comes to California I
employees after leaving the San Francisco Bay Area, from cheaper housing to shorter commutes.
AUSTIN
$45/sq. ft.
$437,800
Typical home value
Class A office asking rent
$80/sq. ft.
$1.38M
SAN FRANCISCO
“Companies save tremendous amounts of money with
taxes and operating costs in
hold would have to be well into the top 20% of income earners, Cox said. City planners also have a role to play in how the housing market evolves. Cox said costs have been driven up in California and West Coast cities such as Portland by urban growth boundaries — a tool used to control urban sprawl by mandating what areas can be used for urban development — and other restrictions. “The basic problem is, when you draw a line around the city and say you shall not develop beyond this line, you force prices up,” Cox said. “Texas should run and hide if such restrictions are ever proposed there.”
Austin versus the Bay Area in California, and also labor costs.” JOHN BOYD JR., principal at site selection consulting firm The Boyd Co.
Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24Made with FlippingBook - Online catalogs