Rackspace Technology plans to move its headquarters to an undisclosed north San Antonio location in mid-2023, according to an email from a senior manager reviewed by TPR. The news of the move to north San Antonio comes less than a month after Rackspace appointed Amar Maletira as the company’s fifth CEO in the past six years.
Rackspace’s headquarters is currently at 1 Fanatical Place in Windcrest, a city on the eastern side of Bexar County. Rackspace rents out some of the space on the property, which it calls “the Castle,” to CodeUp, a coding certification program, and TaskUs, a business customer service company.
The company is transitioning from that around 1.2 million square feet property to an office space of less than 100,000 square feet.
Dan Reese, the mayor of Windcrest, said a representative from Rackspace informed him Friday morning of the decision. He explained it was, in large part, because they had so much space they didn’t use.
“Part of their decision had to do with the fact that they’ve got a lot of square feet in that area, and they’re not using very much of it, in fact, very little of it right now,” Reese said.
He said that Rackspace’s decision will cause the company to break the Master Economic Incentive Agreement (MEIA) that had been extended in January 2020 until 2037, and that the company has said they will honor the terms outlined for breaking the agreement. That includes a payment in the millions of dollars to Windcrest, but Reese said the exact figures need to be worked out.
“So we’re planning on getting together with our team on Monday morning and then working with Rackspace in the afternoon on Monday to just start the process of defining what that termination process will look like and what it will cost,” Reese said. “Figuring out exactly what that is can be a bit of a challenge and probably have a lot of lawyers involved.”
A Rackspace representative did not respond to TPR’s request for comment.
Rackspace has occupied its Windcrest headquarters since 2008, when it made a complex deal with Windcrest, the city of San Antonio and Bexar County. That deal involved San Antonio de-annexing part of its land to Windcrest and splitting the subsequent taxes on that land. Rackspace was exempt from paying property taxes on the abandoned mall building it took over because it would be legally owned by the Windcrest Economic Development Corporation.
Now that the MEIA will be broken, Rackspace will take ownership of the land for $10, after which it will pay property taxes until it sells. Windcrest will also take all tax revenue for land de-annexed by San Antonio that it was previously splitting.
Reese said the Rackspace representative told him the company will help to hand off the property in a way that will still contribute to the local community. He added that Windcrest wouldn’t face any major negative economic impact from the move.
“We have enjoyed our relationship with Rackspace, and I believe that while it’s not something we wanted to happen, we’re very happy that Rackspace is going to work with the city to transition that area to something else that will benefit the city of Windcrest.”
