Hil Davis, CEO of Digital Brands Group, has relocated his company's headquarters from California to Round Rock, Texas, citing significant frustrations with the business environment in the Golden State. The apparel and e-commerce company moved into approximately 70,000 square feet of office and warehouse space in the Austin suburb, a move that Davis characterized as a response to the high cost of doing business in California.
Davis stated that the rent for the new Texas facility is comparable to what the company paid for its former space in Vernon, California. However, he pointed to a combination of factors including California's high cost of living, long employee commutes, and the increasing expense of legal challenges as reasons for the move. "You start to add all those things up," Davis told Fox News Digital. "It doesn’t work. It doesn’t make sense. It’s too hard."
The relocation comes as California grapples with questions about whether its tax structure and regulatory environment are driving away businesses and residents. A proposed one-time tax of up to 5% on individuals worth over $1 billion has intensified this debate, with supporters arguing it would fund public services and opponents warning of potential taxpayer departures.
Data indicates a trend of Californians moving to other states. Los Angeles County, for example, saw a net loss of 17,496 tax filers who took nearly $1.9 billion in income with them, according to recent IRS data. Orange County, San Diego County, Riverside County, and San Bernardino County also experienced significant net losses in tax filers.
These departures can impact the state's tax base, which funds essential services such as schools, public safety, and infrastructure. Davis anticipates this outflow may continue as a gradual trend rather than a sudden exodus.
Despite the challenges, California retains significant advantages, particularly in the technology sector in Silicon Valley and the creative industries in Los Angeles, which Davis acknowledged are difficult to replicate. Digital Brands Group will maintain some production operations in Los Angeles.
The company's new headquarters in Round Rock offers lower operating costs, a strategic shipping location for its national university-focused apparel business, and access to Austin's workforce. Davis also noted that the permitting process for the new facility in Texas was efficient.
Employees of Digital Brands Group now face a decision regarding relocation to Texas, with some opting to move and others choosing to remain in California due to existing ties. The company has made its strategic decision to establish its headquarters in Texas.