CEO Moves Company Headquarters From California to Texas, Citing Rising Costs

ROUND ROCK, Texas — A California businessman has moved his company’s headquarters more than 1,300 miles to Texas, saying the rising cost of doing business in California had become increasingly difficult to justify.

Hil Davis, CEO of Digital Brands Group, relocated the apparel and e-commerce company’s headquarters from Vernon, California, to Round Rock, just north of Austin.

The move comes as businesses continue to evaluate operating expenses, taxes, regulations, employee costs and access to transportation when deciding where to establish their headquarters.

Texas Facility Offers More Space

Digital Brands Group has leased roughly 70,000 square feet of warehouse and office space in Round Rock as the company expands its collegiate sports apparel business.

Davis said the Texas facility costs approximately the same as the company’s previous property near Los Angeles, but he believes the new location provides several advantages.

The Round Rock facility offers access to major transportation routes and gives the company a more centralized location for shipping products to universities and customers around the country.

Davis also said the permitting process for the new facility moved much faster than what his company had experienced in California.

California Costs Were a Major Factor

Davis said the decision was about more than the price of warehouse space.

He pointed to California’s broader cost of living, employee commuting times, regulations and expenses associated with operating a business.

The CEO argued that when all of those expenses are combined, maintaining the company’s headquarters in California became increasingly difficult.

He has been particularly critical of the legal and regulatory costs businesses can face in the state.

Employees Have a Choice

The relocation does not mean every Digital Brands Group employee will move to Texas.

Davis said some workers are interested in relocating with the company, while others have established families and personal connections in California.

Employees have therefore been given the option to decide whether moving to Texas makes sense for them.

The company will also maintain some production operations in Los Angeles, meaning California will continue to play a role in its business.

Why Round Rock?

Round Rock is part of the rapidly growing Austin metropolitan area, which has attracted companies and workers from across the country.

For Digital Brands Group, Davis said the location provides a combination of transportation access, commercial space and proximity to Austin’s workforce.

The central location is also useful for a company whose customers are spread across the United States.

The CEO believes the move will make it easier for the company to operate efficiently as it expands.

Bigger Debate Over California

Digital Brands Group’s relocation comes amid a broader debate about California’s business environment.

Critics argue that high taxes, regulations and operating costs are encouraging companies and wealthy residents to consider states such as Texas and Florida.

Supporters of California’s policies counter that the state continues to offer major advantages, including access to highly skilled workers, technology investment and large creative and consumer markets.

Davis himself acknowledged that California remains difficult to replace for industries concentrated around Los Angeles and Silicon Valley.

A Gradual Shift Rather Than a Mass Exodus

Davis does not expect businesses to suddenly abandon California in huge numbers.

Instead, he believes relocations could happen gradually as individual companies examine their own expenses and long-term plans.

For Digital Brands Group, the decision has already been made.

The company has moved its headquarters to Round Rock while retaining part of its California operations, giving it a presence in both states.

For Davis, the relocation represents a long-term business decision aimed at reducing the pressures associated with operating in California while positioning the company for continued growth.