Why Does Houston Have the Second Most Fortune 500 Companies in the Nation?
The new 2020 Fortune 500 list of annual rankings of America’s largest corporations is out. Houston is called home by the 3rd largest number of the companies on the list, second only to New York City. Houston has been steadily adding to its collection of Fortune 500’s for the past several years, while New York’s number has declined.
Houston had 20 Fortune 500’s in 2005, 22 in 2007, and now has 50. But New York City has dropped from 45 to 43. So Houston had a net gain of +5 in one year. But that’s using city data, not metro. If you count The Woodlands as part of Houston, we pick up Anadarko, for a total of 26 Fortune 500’s and a net gain over NYC of +6. Houston stands well ahead at the #2 spot with Dallas (12), Chicago (12), and Atlanta (9) lagging considerably behind.
More and more businesses keep opening in our city and the big businesses keep coming as well. People keep moving here too. Our population growth is one of the top in the country and our job growth is the top. Houston is the #1 job creator in the nation. We need more employee candidates than we already have, however, since our unemployment statistic is practically nil. In fact it’s at it’s lowest level since 2000. Have you looked at the Sunday Houston Chronicle Employment Section lately!
Construction of new townhome communities and highrises are in progress and more are being planned. Major new office towers are on the drawing board in the different business corridors of the city. Our Class A office space is essentially fully occupied. The Texas Medical Center will soon be the 7th largest “downtown” in the country within the next few years as those current construction projects are completed. All this amid a so-called “recession” and credit crises.
The Houston economy is strong as an ox and indicators are that it will plow forward with continued strength. Sure the rest of the country may be in a crunch but we aren’t — as anyone who pays attention to their environment and not the news would note. Go to the movies on a Friday night and tell me the economy is suffering. Go to the mall on a Saturday afternoon. Go to a restaurant on a Tuesday at lunch or a Wednesday evening for dinner. There’s even a wait for breakfast on a Saturday or Sunday!
Our clients who come to Houston from other areas of the country are always surprised by all the cranes and construction projects they see and how busy the restaurants are. While it seems commonplace for Houstonian’s, it is not the norm in other areas.
Houston’s current standing as one of the hottest cities for business in the nation is due, in large part, to its business-friendly culture, having one of the most rapidly growing populations, a fast-growing and flexible labor market, economical land and construction costs compared with other parts of the country, as well as an affordable cost of living.
Joel Kotkin, an internationally-recognized authority on global, economic, political and social trends, praises Houston as one of America’s great cities of opportunity and as a candidate to become one of America’s great “world cities” in his article, Lone Star Rising, in the March/April 2008 issue of The American magazine.
Houston’s pro-growth, no nonsense politics are major factors driving developers and other capitalistic-minded investors to Houston. Business experts say it’s a matter of simple economics — low taxes, affordable land and an expanding labor force.
Furthermore, Barton Smith, a University of Houston economist, said about two-thirds of Houston growth is from migration from other states. “That only happens when the economy is doing substantially better than other places,” Smith said. “Houston’s economy is going to continue to outperform the national economy in a significant way, so when unemployment starts to creep up in other parts of the country, many people are going to leave Michigan and Ohio and Florida and look for jobs here.”
“Cost is overwhelmingly the No. 1 driver,” said Albert W. Niemi Jr., dean of the business school at Southern Methodist University. And, Lyssa Jenkens, chief economist for the Greater Dallas Chamber of Commerce, said there is a snowball effect — once a few big companies move in, others follow. “They like to be near each other because there are all kinds of services for corporate headquarters – law, accounting, engineering, and information technology services.”
While Houston is leading the way in Texas for America’s Fortune 500 largest corporations, the State of Texas is king of the hill!
The Lone Star State passed New York as home to the most big companies in the latest list compiled by Fortune magazine. Texas now boasts 58 headquarters, three more than New York, the previous No. 1, and California, with 52.
“While other state’s economies have contracted, Texas’ economy continues to strengthen and expand,” said Gov. Perry. “Our educated workforce, reasonable regulatory environment and economic development tools give Texas the competitive edge to compete in a global economy.”