Bye Bye Birdie? Will Elon Musk Take The Twitter HQ To Texas Following Buyout?
Following the news that Elon Musk has agreed to a deal to purchase Twitter for $44B, the question has become, will he move the corporate headquarters of the social media giant to Austin, Texas, as he has done with Tesla and The Boring Company?
Though earlier this month Musk suggested turning the San Francisco headquarters into a homeless shelter, an idea which has attracted the attention and approval of other billionaires such as Jeff Bezos, Musk’s history of broken promises and undelivered big ideas has created uncertainty about the likelihood of such a move. Twitter leases its headquarters at 1355 Market St. and 110th Street, which are owned by JPMorgan Chase and Shorenstein, as noted by the San Francisco Chronicle, limiting Musk’s ability to alter the intended use of the properties.
Dan Ives, an analyst at Wedbush Securities, told the San Francisco Chronicle that Musk moving the headquarters is not likely because Twitter’s location in San Francisco is essential to its overall identity and he believes it would ultimately be viewed as an asset by the billionaire.
For Musk to relocate, he would be required to break the existing leases on the property, fill those locations with subtenants or simply keep paying rent on the properties.
Still, the precedent is there for Musk to relocate Twitter’s operations, and Ives told the Austin-American Statesman he thinks Musk will eventually build up a Twitter presence in the Texas capital. In the latter half of last year, Musk relocated Tesla to Austin, which Business Insider estimated would save the company $2.5B. He has shifted other operations to the Lone Star State, as well: The Boring Company is now headquartered in Central Texas, and though SpaceX retains its headquarters in California, it does rocket testing and more in Texas.
"He's going to have more and more of his operations around Tesla, and I think down the road there'll be some portion of SpaceX operations, and then ultimately Twitter," Ives said to the Statesman. "It's all part of the Musk structure."
Those in support of the potential move believe that it would ultimately be beneficial for Twitter, as the lower cost of living would be a massive incentive to prospective employees, and proximity to the University of Texas in Austin, along with other colleges, would serve as a source of labor, according to comments made to the Statesman by Mark Arend, editor-in-chief of Site Selection Magazine.
The loss of Twitter would be a blow to San Francisco's struggling office market. Office space availability within the metro hit an all-time high in the first quarter of 2022, with JLL noting direct vacancy in the Mid-Market submarket, where Twitter is headquartered, is 20.8%, well above San Francisco's average of 14.9%. Though Twitter has been continuing to allow its employees to work remotely, the company showed no signs of slowing down its office growth, expanding its HQ by 80K SF in January and signing a lease to occupy a 66K SF, 18-story tower in Oakland in the fall of last year, which the company planned to dedicate to hybrid work. This location marks the third such office space for the company in the Bay Area, including a location in San Jose. Even if Musk retained the HQ in San Francisco, he could shutter some of these ancillary offices.
