Another L.A. Company Hitting Trail for Texas?

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Another L.A. Company Hitting Trail for Texas?
Jacobs' office in Pasadena.

How much of a presence will Jacobs Engineering Inc. maintain in Pasadena now that the firm has made clear its intention to relocate some – and perhaps all – of its headquarter operations to Dallas?

That question has gripped the city since the revelation last week that the giant engineering and construction company had been enticed to expand in Dallas, a market close to its big oil and gas exploration clients.

Paul Little, chief executive of the Pasadena Chamber of Commerce, said Jacobs employs between 250 and 300 people in that city, and he expected that number to diminish by 30 percent by the end of the year, which could include the relocation of top brass. However, Little said he doesn’t know whether local employees would make the move or if Jacobs plans on hiring new staff in Texas.

“The firm is moving 100 jobs to Dallas in the next couple months,” he said. “I expect the leadership will move, too. In the long term, they are looking at the location where their clients are.”

Jacobs, which has nearly 60,000 employees overall, takes up 84,000 square feet of the 208,000-square-foot office building at 155 N. Lake Ave. and has already sublet a portion of that space to global communications firm Everbridge Inc.

Everbridge, which already has its West Coast headquarters in the building, will expand into offices vacated by Jacobs later this year, according to William Boyer, a spokesman for the city of Pasadena. How much space Everbridge will take and when that will happen is still unclear, however.

Company representatives did not respond to requests for comment.

Representatives of Prudential Financial Co., the building’s owner, and Jones Lang LaSalle Inc., which handles leasing for the property, did not return a request for comment.

Scott Unger, an agent in the downtown L.A. office of Charles Dunn Co. Inc., said Jacobs started downsizing its Pasadena office six months ago, advertising that 25 percent of its leased headquarter space was available for sublease.

On move

Jacobs spokeswoman Mendi Head confirmed in an emailed statement that the firm is planning “to move a portion of its corporate functions from its Pasadena location to Dallas later this year, pending a successful real estate process and final approvals for state and local economic development investments.”

Head declined to disclose further details, except to say the Pasadena office will continue to house some Jacobs personnel, though she declined to disclose the number of employees working there. She would not say whether Jacobs planned on moving its headquarters to Texas or whether the company’s leadership is among those moving in the near term.

However, Chief Executive Steven Demetriou said at a June 2 engineering and construction conference hosted by Credit Suisse that the company is indeed considering a move of its headquarters.

“If we end up relocating our headquarters to Dallas … I will point out Dallas as our global headquarters for our building and infrastructure,” he said. “It’s close in proximity to our oil and gas chemicals business, which is centered in Houston.”

Jacobs builds production, storage, and transportation facilities for major oil companies such as BP and ConocoPhillips Co. and has 300 employees working out of offices in downtown Dallas.

“A lot of Jacobs’ clients are major oil companies that are based in Texas,” said John Rogers, an analyst for Costa Mesa-based D.A. Davidson & Co. “There are a lot of cost advantages to be in Texas.”

While the initial departure of 100 employees from the Pasadena headquarters is not expected have a huge financial impact on the city, the loss is still significant, said Larry Kosmont, president of Manhattan Beach consulting firm Kosmont Cos., which aids cities with redevelopment efforts.

“California continues experiencing companies leaving for somewhere else,” he said, “and it’s never good for our economy.”

Pasadena spokesman Boyer said he’s not sure what kind of financial impact Jacobs’ move would have on the city.

“I don’t know if there has been an analysis on the tax loss,” he said, “but of course we’re concerned.”

Jacobs is following in the footsteps of several large companies that have left Los Angeles for Texas in recent years, including Toyota Motor Corp.’s North American division and coffee maker Farmer Bros.

While many businesses have strategic reasons for growing their presence in the Lone Star State, which does not have a state income tax, officials there have also sweetened the pot by offering a number of financial incentives to aid firms in their relocation. Farmer Bros., for example, received a 60 percent property tax break for 10 years.

Dallas is also moving to make incentives available for Jacobs. The City Council’s economic development committee approved a $277,500 grant on June 6 that would “encourage the relocation of the company headquarters and stimulate business development activity in Dallas.” A vote to approve the grant is scheduled for June 22.

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