AUSTIN, Texas — Apple plans to build a $1 billion campus in Austin, Texas, that will create at least 5,000 jobs ranging from engineers to call-center agents while adding more luster to a Southwestern city that has already become a bustling tech hub.
The decision, announced Thursday, comes 11 months after Apple CEO Tim Cook disclosed plans to open a major office outside California on the heels of a massive tax break passed by Congress last year. The tax cut on overseas profits prompted the company to bring about $250 billion back to the U.S., freeing up money for more investments and higher dividends for Apple shareholders.
The company said it will also hire thousands more engineers in several other emerging high-tech hotbeds. Apple plans to open three new offices that will each employ at least 1,000 workers in Seattle, San Diego and Culver City, California. Apple also pledged to add hundreds of new jobs each in New York, Pittsburgh, Boston, Boulder, Colorado, and Portland, Oregon.
"They are just picking America's most established superstar cities and tech hubs," said Richard Florida, an urban development expert at the University of Toronto.
Apple's scattershot expansion reflects the increasing competition for engineers in Silicon Valley, which has long been the high-tech capital in U.S.
The bidding for programmers is driving salaries ever higher, which in turn is catapulting the average prices of homes in many part of the San Francisco Bay Area above $1 million, causing many workers with computer coding skills to live in less expensive places with less traffic congestion.
That, in turn, is causing more tech companies like Apple, Amazon and Google to set up shop outside Silicon Valley to hire the talent to pursue their ambitions to expand into new products and fields of opportunity.
"Almost every place else in the U.S. is cheaper than Silicon Valley," said Jeb Kolko, chief economist for employment website Indeed.com. "Companies that can find the workers they need elsewhere often do."
Cities around the country offered financial incentives in an attempt to land Apple's new campus, but Cook avoided a high-profile competition that pitted them against one another, as Amazon had before deciding to build huge new offices in New York and Virginia.
Amazon could receive up to $2.8 billion in incentives in New York, depending on how many it ultimately hires there, and up to $750 million in Virginia. Apple will receive up to $25 million from a jobs creation fund in Texas in addition to property tax rebates that still need approval. The figure is expected to be a fraction of what Amazon received in New York and Virginia.
The spots where Amazon and Apple decided to expand were obvious choices, based on an analysis released earlier this year by CBRE Research. Washington, D.C., ranked as the third best place in North America for tech talent, behind Silicon Valley and Seattle. New York ranked fifth and Austin came in sixth. (Toronto was fourth.)
The new Austin campus, with about 3 million square feet (nearly 280,000 square meters) of office space, will be about a mile from another large office that Apple opened five years ago. Apple currently employs about 6,200 workers in Austin, making it the company's largest hub outside Silicon Valley even before the expansion. Apple recently completed an even larger complex that serves as its new headquarters in Cupertino, California, where it still maintains its old campus.