Charles Schwab’s Crystal Ball: Projecting the Location of “Future Talent” Leads to Texas

December 12, 2016

(Episode 8 of “The Project: Inside Corporate Location Decisions”)


Charles Schwab recently announced plans to build a $100 million campus that would initially house 1,200 staffers in Westlake, Texas, a growing community in the Dallas-Fort Worth region. Understanding where the right financial services talent “is going to be” in the next 20 years was the key to selecting a location in the Dallas region.

To get the inside story we decided to “Talk to Chuck” – or in this case Chuck’s Senior Vice President of Corporate Real Estate Glenn Cooper. We also interview Larry Gigerich, Managing Director of Ginovus (a site selection firm engaged by the company) and the Honorable Laura Wheat, Mayor of Westlake, Texas.

 

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Patience Fair brother (DCI): Charles Schwab, the company that encourages consumers to take a long-term about investing, does exactly the same when planning its own future. Back in 2013, the company began exploring the construction of a new campus that would initially house 1,200 workers, but have the potential to grow much larger. The expected opening date is sometime in 2019. Yes, these guys are consummate planners.

Glenn Cooper (Charles Schwab): Their search brought them to Westlake, Texas, a suburb of Dallas that has just over 1,000 residents overall. But Monday through Friday, their population grows by about 12,000 people who commute in to work every day. Schwab purchased 70 acres of pristine land, the former Circle T Ranch, and this is a place where Texas longhorns have roamed for years. It’s all about 20 minutes from BFW Airport, the 10th biggest airport in the world.

Patience: So welcome to Episode 8 of The Project: Inside Corporate Location Decisions. I’m Patience Fairbrother of Development Counsellors International.

Andy Levine (DCI): I’m Andy Levine, also with DCI and Patience’s cohost of The Project. So every two weeks, we bring you a new story of a corporate location decision. We share an inside look from companies’ executives, economic developers, as well as site selection consultants.

Patience: This week’s show has been a pleasure to put together. With a project cost of $100 million, the Charles Schwab announcement is the largest project we’ve covered yet. In terms of site selection decision-making, the company is really at the top of their game. It’s a big company with over 14,000 employees. Schwab’s headquarters is in San Francisco, but the company’s growth has been in cities like Denver and Austin.

Andy: So we’re going to start by hearing from Glenn Cooper, the company’s Senior Vice President of Corporate Real Estate. Glenn joined the company back in 2001, and he has absolutely boundless enthusiasm for his work at Charles Schwab.

Patience: He’s responsible for all of Charles Schwab’s real estate, everything from strategy to buy-sell decisions, to managing janitorial services.

Andy: Now, that doesn’t mean he cleans toilets at Charles Schwab, right?

Patience: No, he doesn’t.

Andy: Okay, good.

Patience: He is a busy guy, but I think he would’ve spoken to us all day about the Westlake project.

Andy: Tell us what prompted the company’s decision to build a new facility, rather than expand or use an existing one.

Glenn: I guess to best answer that question, I’d go back several years.

Andy: Okay.

Glenn: So several years ago, Schwab developed our long-term real estate strategic plan. We looked at the entire portfolio. We used a set of criteria, determined where we were successfully attracting the talent we required, and where we could continue to find the specific skill sets to enable growth. Of course, real estate was a part of that criteria, but was not the only driving force. The result was a target size by location and by job function.

Patience: This was back in 2008, and it led them to build a major campus in Denver, Colorado, a facility that today holds over 3,500 people

Glenn: I think the most notable actions that came out of that were a big decision to reduce our size in our headquarter city of San Francisco and to expand in the Denver area.

Andy: So if you want to understand what Charles Schwab is doing in expanding to the Dallas region, the playbook was essentially written eight years ago in their Denver expansion. But today, Denver and other facilities around the country are approaching capacity, and it’s time to look at some new options in a new market.

Patience: So can you tell us a little bit about that initial search once you decided that you were looking to open a new facility somewhere? Were you looking specifically in Texas, or were you looking at other options as well?

Glenn: So we brought on a firm, KLG, and they’re a demographics firm. They helped us. They took our criteria, and they looked at using our criteria across the entire U.S., which cities might satisfy that specific criteria.

Obviously, it’s a weight criteria. Certain things are more important than other things. But heavily it’s all about demographics. Where can we hire the people we need with the skillsets we need today, and where can we hire them in the future. KLG narrowed it down to just a few cities. I think we got down to about four prime cities and Dallas was one of those.

Patience: Dallas quickly emerged as the top contender.

Glenn: Really, Dallas just jumped out. I mean, it didn’t take us long to go from the short list to number one. We just added a little bit more criteria, and the business environment of Texas just was incredible. So it didn’t take long to get down to Dallas.

Andy: You mentioned sort of a weighted criteria. But really, it sounds like what’s the key thing is finding where the right talent was going to be in the future. Am I reading you correctly, Glenn?

Glenn: That is the most important piece of the criteria.

Andy: So all roads lead to Dallas, and the next challenge is finding a site that can house the campus that Schwab wants to build.

Glenn: Dallas is indeed a very big city. So we continued to work with KLG, and then we brought on our brokerage firm. We brought on an excellent broker, Josh White out of CBRE. Between KLG narrowing the criteria and Josh White helping us with real estate, we pretty quickly got down to about a four or five-mile radius. It seemed that dead center of that was the Southlake/Westlake area.

Patience: So with a criteria of 50-plus acres, there are only a handful of options, and at the top of the list was the Circle T Ranch in Westlake, Texas. Here’s Laura Wheat, who has been Mayor of the town of Westlake for the past nine years.

Laura Wheat (Mayor of Westlake, TX): I am very fond of describing Westlake as an oasis of natural beauty, which is in the midst of an ever-expanding urban landscape. We are noted for our distinctive architectural design and development, our high-quality construction standards, rolling hills, miles and miles of walking trails, but in the midst of the DFW Metroplex. It’s a pretty incredible place. We still see oxen and longhorn cattle, and we have to avoid deer at night. So it’s a really special place, a very unique environment.

Andy: There were some issues that needed to be worked out between Westlake, Schwab, and the Hillwood Group, the owner of the Circle T Ranch and developer for the project.

Laura: Well, the first issue that was on the table concerned the issue of multi-family housing. That’s a.k.a. apartments. Westlake just, the particular area that Charles Schwab is looking at on the Circle T Ranch did not include apartments as part of their zoning package, and we really held firm on that. It wasn’t a tough decision, but it was a tough conversation to have with both Hillwood and Charles Schwab to say, “Look. You just can’t imagine how much we want to have you as part of our team in Westlake.

But if apartments really are critical to your decision, then we’re not the right place for you.” I’m thrilled to say that they went back to the table and came back with a revised plan, which did not include apartments.

Patience: So we’re now in the homestretch and Charles Schwab brings in its third consultant, an Indianapolis-based site selection firm called Ginovus. Here’s Larry Gigerich, the company’s Managing Director.

Larry Gigerich (Ginovus): So they brought us in to validate some business climate and talent findings. But again, their model is very sophisticated and it’s rare where we find something that’s out of place, so to speak. Then, yes, our focus primarily, once we validated those findings they had completed internally, was to look at different potential options for local and state incentives to offset project costs and ongoing operating costs.

Patience: Tell us a little bit about that negotiation process and kind of help us understand how important those incentives were to make the project happen.

Larry: Well, I’ll start by saying, we tell every one of our clients, economic development incentives should not be the top driver for a site selection decision. I think sometimes people in the general public don’t understand that. They think it’s all about incentives. But no amount of incentives is going to overcome not having the right talent, not having the right tax structure, not having good real estate options, and all those other things that impact project and operating costs for companies.

Andy: Larry, can you paint for our listeners kind of a picture of sort of how this happens? Are you flying down to Westlake and you’re sitting across the table from the mayor? Are you going to Austin and meeting with the governor’s people?

Larry: It’s a great question. With the advances in technology, certainly there’s a lot that can be done electronically. Now, I am still a big believer and maybe a little bit more old-school in this way that I still believe that having a few face-to-face discussions are an important part of the process.

That’s how we typically begin the process. We’ll fly down. In this case, we flew down to Dallas-Fort Worth, met with town, county, and state officials to discuss the project, and then there was a lot we did electronically. We provided a number of documents to the local and state officials. We held a number of conference calls.

Then, really as we were getting down to the final stages, I traveled down again to the Dallas-Fort Worth area, sat down with everybody and said, “Okay. Here’s what we think we need to do to put this all together so that it would work well for our client. It’s within the constraints of what you can do at a local and state level.”

Patience: The centerpiece of the incentives package was a $6 million Texas Enterprise Fund grant. The project will create the largest number of new jobs by a TEF grant recipient since the beginning of Governor Greg Abbott’s administration.

Andy: So that’s the story of how Charles Schwab decided to build a $100 million campus that will initially house 1,200 workers in Westlake, Texas. Certainly, Patience, this is one of the most interesting projects that we’ve profiled since launching this podcast.

Patience: I absolutely agree.

Andy: Now, it is time to turn to the takeaways portion of the podcast. I will defer to you and let you get started here, Patience.

Patience: Great. So I think one of the key issues and themes that comes throughout this episode is the issue of talent. Now, Charles Schwab is this very forward-thinking company. With this particular project, they started discussions back in 2013 with the facility not even going to open until 2019. So even if we look back at their Denver operation, their first thought was to do this strategic study, and the outcome was basically, “The number one issue for us is talent.”

 

Andy: The interesting thing about it from my perspective is not just who has the talent, but where is the talent going to be in the future? So they’re trying to look 10, 20, 30 years ahead, and where is that talent going to be.

Patience: Exactly. In that first case, they said the talent really in the future is going to be in Denver. Now, in this case, they basically replicated that for the second phase, and they found that the talent even further in the future is going to be in Dallas. So they basically took what they learned there and they replicated it.

Andy: Sure. Sure. I’m going to take us in a little different direction. To me, the other side is sort of their willingness to bring in outside consultants to help put them on the right path, in some cases validate what they’re doing, but add value. So this is the first one in terms of Charles Schwab initially hired KLG for the demographics study. They then turned to CB Richard Ellis for the location search.

They then turned to Larry Gigerich, we heard from, in Ginovus to basically validate their findings, as well as negotiate the incentives. So could Charles Schwab have done this all themselves? My guess is they probably could have, but they’re very willing and very open to bringing in outside consultants that they feel can add value.

Patience: They’re not afraid to call on the experts to ask the big questions.

Andy: Absolutely not, and I think there’s a good lesson in that for other       companies.

Patience: So that is a wrap on Episode #8 of The Project: Inside Corporate Location Decisions.

Andy: There are a number of people that we need to thank here. Let’s start out with Glenn Cooper of Charles Schwab. Glenn was completely open with us about the company’s site selection process, and we really appreciate that. We also need to thank Mayor Laura Wheat of Westlake, Texas. This was a huge win for her town. Finally, we want to thank Larry Gigerich, our good friend and the Managing Director of Ginovus. We appreciate his insight into the incentives negotiation process.

Patience: Last but not least, we want to thank Jordan Robinson of the Office of Governor Greg Abbott, who made the connections for us to set up all of these interviews. The Project is sponsored by DCI. We are the leader in marketing places and have served over 450 cities, states, regions, and countries. You can learn more about us at aboutdci.com.

Andy: So this is our last podcast in 2016. If you’ve recently been involved in a site selection project that you think would make a strong profile on the project, we’d love to hear from you. Please give either Patience or I a call. Our contact information is available on our website at aboutdci.com.

Patience: Best wishes for the new year and the many more projects to come in 2017.

Written by Andy Levine

Andy Levine is President/Chief Creative Officer of DCI. Since joining DCI in 1991, he has worked with a broad range of places from “A” (Alabama, Asheville, Australia) to “W” (Wales, Wichita Falls, Wyoming).

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