Chevron shrinks San Francisco headquarters, offers to relocate employees to Houston

(AP Photo/Alan Diaz)

Chevron is downsizing its global headquarters in San Francisco and moving into a smaller campus. The oil giant has a more than 140-year-long presence in California and will not completely leave. Its current Chevron Park campus in San Ramon will be sold. Chevron hopes to vacate the 100-acre campus in late 2023.

The company plans to move its headquarters into a smaller leased office campus elsewhere in the region. Chevron is inviting employees to voluntarily relocate to Houston and if they do, Chevron will cover relocation costs to Houston. About 2,000 people currently work in the global headquarters building. It remains to be seen how many employees will opt to relocate. Chevron isn’t making it a mandatory move to Texas but if they do relocate, they will join about 8,000 Chevron employees already in the Houston area. There are 6,000 employees in downtown Houston. Chevron is the biggest private employer in downtown Houston,

Chevron has plenty of office space and requires employees to come into the office, working less from home. This is how the company believes it strengthens the company’s culture. Chevron’s policy decision to call workers back to their offices is credited with strongly helping downtown Houston recover from the pandemic.

The energy firm has roughly 3 million square feet of office space in downtown Houston spread across three buildings. Chevron also owns two office buildings in northwest Houston that it picked up after it acquired Noble Energy. One of those 438,000 square-foot building represented one of the largest blocks of sublease office spaces available in Houston area as of the first quarter 2022, according to real estate firm Cushman & Wakefield. In the past year, Chevron also moved into a leased small office space in The Ion, Rice Management Co.’s startup incubator in Midtown Houston.

In February, Chevron started requiring office-based employees to physically commute to the office at least three days a week.

“One of the primary reasons that we felt strongly that it was the right thing to eventually come back is we believe that every company has to preserve a strong culture and that comes from collaboration, face-to-face feedback and our ability to interact with each other on a human (level). We strongly believe that contributes to better business outcomes,” Steve Green, president of Chevron North America, in a March interview. “I’ve heard more and more people had forgotten all the positive things from being together, like the ability to go to lunch with someone, the ability to walk out of the building to go to a different restaurant, the ability to collaborate fact-to-face on a business issue, or to ask a short question without having to jockey for positions on a calendar for a Teams or Zoom call.”

As the biggest private employer in downtown Houston, Chevron’s return-to-office was a major boost in assisting downtown Houston’s economic recovery from the pandemic. Green, however, said the company has continued to see value in allowing for some flexibility.

“We did learn some things working remotely that we very much want to preserve,” Green said. “Long-term it will be less necessary for people to travel for a 2-hour meeting (for example).”

Houston is the energy capitol of the world. All of the major players have offices here, as well as smaller operators. The last company to make a shift to Houston was Exxon. It is selling its former headquarters campus in Irving, Texas since it moved its headquarters to Houston.

Earlier this year, larger rival ExxonMobil XOM said that it is packing up its headquarters from its longtime office in Irving and moving to the Texas campus. Per the oil biggie, the transfer of its global base to the country’s energy hub is in its best strategic interest and supports its strategy for profitable growth. ExxonMobil has been based in Irving for decades.

XOM said it will finish transitioning its headquarters to Texas by the middle of next year. The Fortune 500 firm’s top brass, plus some 250 employees of ExxonMobil is expected to shift base to Texas.

The trend for California companies to relocate to Texas is strong. Chevron isn’t ready to completely move its offices to Texas, though, because of its long history in California.

Although many California companies have relocated to Texas during the pandemic – from Tesla to Oracle and Hewlett Packard Enterprises – Chevron has maintained it plans to headquartered in the Golden State.

“The current real estate market provides the opportunity to right-size our office space to meet the requirements of our headquarters-based employee population,” the company said in a statement. “Chevron will remain headquartered in California, where the company has a 140-year history and operations and partnerships throughout the state.

It is reported by the San Francisco Gate that the “company leadership has pushed for a permanent move to Texas in the past.”

The SFGATE notes Chevron is one of “the East Bay’s legacy companies joining the trend” to move their headquarters out of the area in recent years. Tech companies such as startups like Coinbase to industry pioneers like Hewlett Packard and Oracle have all vacated, with Elon Musk having been “one particularly outspoken voice decrying California’s business conditions.”

Companies have grown tired of the high cost of operating out of California. The cost of living is high for employees, too, who will no doubt appreciate a reasonable cost of living in Texas, if they choose to relocate.