Defense contractor and longtime Austin corporate denizen BAE Systems Inc. on Oct. 4 officially opened the doors to its new $150 million home within the Parmer Austin business park.
The move from the East Austin campus it had owned to a smaller, leased site in North Austin represents a long-term pivot, said Scott Hatch, site director of what BAE Systems calls its Austin Business Center.
Through the move, BAE Systems shrunk its local footprint from roughly 539,000 square feet in East Austin to about 390,000 square feet at the new site at 825 E. Howard Lane. The relocation fits into an ongoing transition for portions of its workforce to adopt hybrid work — a trend that’s top of mind for many company leaders and one that has the potential to significantly impact commercial real estate.
“This site was designed for more flexibility than our old site,” Hatch said. “The ability to have more flexible work was part of the plan before the pandemic and I think the pandemic really accelerated everybody’s view of how we do that and how to do that effectively.”
Even with the smaller footprint, BAE Systems plans to double its Austin headcount in the coming years, from about 700 today to around 1,400.
BAE Systems is not the only big company moving forward with smaller physical footprints. Major employers, from Microsoft in Seattle to Asurion in Nashville, appear to be downsizing their office space. Puget Sound Business Journal reported new office leases in the Seattle market are typically 75% of their pre-pandemic size, but it may console some landlords to know that many tenants are signing longer-term deals.
At the entrance to its new North Austin building, the Oct. 4 opening ceremony for BAE marked the end of a period of transition, kicked off when the move was announced in August 2020.
The new building was a chance to rethink office design and to bring everyone together under one roof, Hatch said — the East Austin campus had been spread across multiple buildings.
“If you looked at our growth projections, we needed to hire more folks,” he said. “It was really the growth needs of the business that facilitated the new building and from there we took the opportunity to change things up just a little bit.”
BAE Systems estimates that its staff will save 7,000 hours of annual commute time because of the move. The building also provides new amenities including a food truck park.
“It is a much better place to attract and retain folks,” Hatch said. “The new site provides a modern and collaborative design space. We did not have that space at our old site. This space provides that opportunity and propels us forward a little bit in terms of office culture streamlining manufacturing and adding a little automation.”
Part of the larger England-based defense contractor BAE Systems PLC (OTCMKTS: BAESY), BAE Systems Inc. is a Virginia-based aerospace and defense contractor that delivers a range of products and services for air, land, sea and space, as well as advanced electronics, intelligence and security technology.
The larger BAE Systems employs roughly 89,600 people worldwide.
“This is a Texas-sized big deal for us,” said Roland Peña, senior vice president of global technology and innovation at the Greater Austin Chamber of Commerce.
He said the expansion continues to build on the company’s 65 years of history in Central Texas.
The Austin office is part of BAE Systems’ Electronic Systems division, which contributes to researching, developing, implementing and maintaining cutting-edge commercial, defense and space electronics. Local workers help the company in the areas of autonomy, information technology and sensor development.
Work at the site will also focus on new and existing programs including the design, development and manufacturing of radio frequency and electro-optical/infrared countermeasure systems as well as aircraft electrification technology.
Half of BAE Systems’ new facility is dedicated to manufacturing, and the rest is for the engineering department, design laboratory and general office space.
“We are growing our business, our talent and our brand in Central Texas,” said Dave Harrold, vice president and general manager of countermeasure and electromagnetic attack solutions at BAE Systems.
Earlier this summer, BAE Systems announced it would bring on 100 new hires as it moves some of its Control and Avionics Solutions division from Endicott, New York, to Austin. The move is part of the company’s larger effort to support a transition to electric-powered aircraft, with a focus on the private sector rather than its traditional focus on military contracts and support services.
The transition is also part of the company’s wider effort to reach net zero emissions by 2030.
Expansion space exists within the manufacturing facility to accommodate future growth, and some of that capacity will hopefully be taken up by local companies that need BAE to bring their products to fruition, executives said.
“There has never been a more exciting time to be in Texas and especially Austin,” said Gordon Daugherty, co-founder and chairman of startup incubator Capital Factory. “Our startup and venture funding scenes are booming. Over the past decade, our startup scene has evolved far beyond enterprise software to include lots of really big ideas.”
Daugherty said BAE Systems, which is part of Capital Factory’s Innovation Council, represents how large tech employers can support the startup scene.
“The level of engagement between them and our startups just continues to increase,” he said. “We are all super excited about BAE’s continued commitment to Austin. We are just getting started.”
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