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South Florida lures more corporate headquarters


 

MIAMI – Jan. 22, 2014 – Lured by the sun, low taxes and a diverse workforce, an increasing number of companies are setting up corporate headquarters in South Florida.

Eighteen corporate headquarters have expanded or moved to Broward and Palm Beach counties since the recession officially ended.

Seven of those offices moved from other states or countries; 11 expanded here.

For residents and communities, the trend means hundreds of high-paying jobs, more tax revenue, real estate investment, contributions for charities and events, and an indirect boost to housing and consumer spending.

“A corporate headquarters brings something completely different than a back-office operation,” said Kelly Smallridge, president of the Palm Beach County Business Development Board. Executives “become some of our greatest community leaders and participants.”

Twenty years ago, few large companies called this area home, but Broward County now counts 150 regional or national headquarters. Those include AutoNation and Citrix Systems, as well as Latin American headquarters for Emerson, Microsoft and Wendy’s.

Palm Beach County has about 60 headquarters, including Office Depot, ADT Corp. and newer entrant Garda World, the cash services base of a Canadian security company.

Granted, most of the new headquarters do not belong to Fortune 500 companies. But South Florida has been particularly successful attracting regional or Latin American headquarters, which also offer high-paying jobs and invest in the region.

J. Antonio Villamil, an economist and principal of the Washington Economics Group in South Florida, would like to see more traditional companies like Office Depot or AutoNation, both homegrown companies, but “the next best thing is the regional headquarters,” he said.

And more headquarters are on the way, economic officials say.

“Now that we’re coming out of the recession, I think we’re going to see more projects, more companies that are going to look at moving,” said Bob Swindell, president of the Greater Fort Lauderdale Alliance.

In Palm Beach County, Smallridge has worked for seven years to recruit corporate headquarters, most recently focusing on states where taxes are high and on CEOs who have second homes in South Florida.

The primary reasons headquarters come here are easy access to international airports, a multilingual and skilled workforce, options in leasing or building office space, lower energy and construction costs – and no state income tax, Swindell and Smallridge said.

Broward County has promoted the area as one offering “Life. Less taxing,” in advertisements featuring entrepreneur H. Wayne Huizenga.

Increasingly, economic incentives are part of the decision for corporate relocation. Del Boyette, a site consultant and principal of Boyette Strategic Advisors in Georgia, calls them “a critical piece of that decision-making pie.”

Economic officials downplay the role of incentives, saying they’re just part of the equation. But of the 18 companies that have moved in or expanded since 2011, about half were awarded some type of incentives, usually tied to job creation, according to state records.

Still, executives and economic officials point to myriad other reasons for their decisions.

St. Louis-based Emerson, a $25 billion global manufacturer and technology company, considered Texas, Panama, Costa Rica and Brazil for its Latin American headquarters, before picking South Florida.

“We’ve been here for two years, and it’s probably one of the best decisions we’ve ever made,” said Emerson’s Latin American operations president, Leo Rodriguez, who now oversees 100 employees at the headquarters in Sunrise.

Rodriguez pushed for South Florida because of its talent pool: finance, human resource and asset management professionals who can speak Spanish and Portuguese; its access to South American flights; and its proximity to other Latin American headquarters.

“South Florida has a community of Latin American headquarters that you don’t have anywhere in the U.S.,” he said. “South Florida is very plugged into what’s happening in South America.”

Rodriguez said that while Emerson was offered an attractive incentives package, “what really drove us was our access to talent and logistics. If they had halved the incentives, we still would have come.”

Emerson previously said it was awarded $586,000 in economic incentives in 2011 and $140,000 to $180,000 last year, based on further job creation in Sunrise. So far, the company has created nearly 100 jobs and expects to triple that in three to four years, Rodriguez said.

Broward County’s economic development officials recently worked to keep Hollywood-based Prolexic Technologies in the county. The company is being acquired by a Massachusetts firm and needed a new site for its rapid growth.

The company selected space in New River Center in downtown Fort Lauderdale.

“We wanted to find a location that was ideal for attracting the highest-caliber talent in South Florida, and Fort Lauderdale gave us the broadest reach from Miami to Palm Beach,” said Michael Donner, chief marketing officer.

Prolexic could earn up to $1.6 million in state and local incentives, based on the creation of 118 jobs with an average salary of $100,000, and retention of 120 jobs.

Palm Beach County’s scramble in late 2013 to retain Office Depot is an example of how corporations make headquarters decisions. When Office Depot merged with Illinois-based OfficeMax, Illinois dangled a big incentive package. But the legislature didn’t follow through with a commitment.

Smallridge worked with Gov. Rick Scott, who had made it clear he didn’t want to lose Office Depot, to retain the company. She and other economic officials pointed to Office Depot’s $123 million annual economic impact to the county and to its philanthropy: Office Depot has its foundation in Boca Raton and supported the local community with contributions valued at $2 million from 2008 to 2012, according to company data.

Smallridge said a company sometimes just wants a new start. “They want to shed the old culture or brand. One of the ways to do it is to go to a new location,” she said.

Or, the top executive of a privately held company may want to live in South Florida, so the headquarters moves here. With privately held companies, it can be that simple.

As an example, Smallridge points to Stephan Cretier, founder and CEO of GardaWorld Cash Services, which bases its cash logistics headquarters in Boca Raton. The company so far has created 500 jobs – more than five times what it promised in 2011 – and last year announced a further expansion.

“Stephan had a home just over the border line from Palm Beach County,” she explained.

Copyright © 2014 the Sun Sentinel (Fort Lauderdale, Fla.), Marcia Heroux Pounds. Distributed by MCT Information Services.

Related Topics: Commercial