Starbucks announced this week it will invest $100 million to open a corporate operations office in Nashville, Tennessee, creating up to 2,000 jobs over the next five years, a move that has prompted scrutiny of Washington state's business climate and renewed calls from Seattle leaders to retain the company's long-term presence.
The Nashville office, which will be housed in 250,000 square feet at the Peabody Union tower, will support Starbucks' supply chain, sourcing, and technology operations across North America. CEO Brian Niccol confirmed the expansion at a press conference alongside Tennessee Governor Bill Lee, saying the state had "created a really strong business climate" and offered access to a skilled and growing workforce. The company said Seattle will remain its global headquarters.
The announcement comes amid a notable shift in Washington's standing as a business destination. The Tax Foundation ranked Washington 6th nationally for business climate in 2014; it now ranks 45th. Washington Governor Bob Ferguson signed a new millionaire's tax in March, and the state recently enacted a 6.5% levy on IT services — a tax Starbucks can largely avoid by relocating technology teams to Tennessee. The Washington Policy Center estimates the state could lose up to $750 million in tax revenue over the next two decades as a result of the expansion, with Starbucks saving an estimated $12,000 per employee annually in Nashville compared to Seattle.
Tennessee, by contrast, has no personal income tax and offers incentives such as a $5,000-per-employee annual tax credit for companies that establish or expand a headquarters and invest at least $100 million. State officials have not yet disclosed the specific incentives offered to Starbucks.
The Nashville move follows a period of tension between Starbucks and Seattle officials. Last November, then-Mayor-elect Katie Wilson appeared at a union rally outside a Starbucks location and encouraged attendees to boycott the company. Shortly after, the company was reported to be exploring lease space in a Bellevue office tower. Starbucks has since closed multiple Seattle locations, including both of its Reserve Roasteries in SoDo and Capitol Hill, and laid off hundreds of workers in the region.
Seattle and state leaders have since moved to underscore the company's importance. City Council President Joy Hollingsworth said the city wants to do "whatever we can" to keep businesses of all sizes as part of Seattle's economic ecosystem. Mayor Wilson's office said in a statement that Starbucks is "a core part of Seattle's identity" and that the city is "focused on maintaining a strong partnership with leadership and with employees." Governor Ferguson's office confirmed he met with Niccol, with a spokesperson describing it as "a good conversation."
Jon Scholes, president and CEO of the Downtown Seattle Association, issued a statement Tuesday calling the expansion a warning sign. "Seattle is operating in a competitive landscape with cities vying for employers and jobs, and we must do everything we can to ensure companies locate and grow here," Scholes said. "Over the last three years, Seattle has shed thousands of jobs while other cities in the region and across the country experience job growth. City leaders must accept this reality and commit to a more competitive and welcoming approach to further economic opportunity and prosperity."
Starbucks, which was founded in Seattle in 1971, employs approximately 3,800 workers at its SoDo headquarters. The Nashville office, at 2,000 employees, would represent more than half that headcount. The company expects the Tennessee offices to be operational by 2027.
