WHY COMPANIES ARE MOVING DOWNTOWN

Worker preferences are driving relocations.

By Alexis Stephens
NextCity

The debate about whether or not urban downtowns are definitively back or not feels interminable. Some statistics tell the story that millennials are undoubtedly swearing off adulthood in suburbia for urban lifestyles. Others point to downtowns in many Rust Belt cities that have yet to rebound.

While we’ve all dithered over what millennials are andaren’t doing for today’s cities, someone’s checked to see what America’s CEOs think.

A new report from anti-sprawl Smart Growth America and the real estate consultants at Cushman & Wakefield asked companies that have made the decision to relocate downtown between 2010 and 2015 why they’ve made that choice, and how they might empower others to follow suit.

“We’re very interested in this trend, clearly, because we hear time and time again from our clients about the war for talent out there,” says Paula Munger, director of business line research at Cushman & Wakefield. “It’s an extremely difficult and competitive environment for hiring and retaining talent.”

After conducting a survey of 500 companies and interviewing executives at 45 of those businesses, they concluded that talent attraction and retention is the most common reason that businesses have ultimately made their decision to move to a downtown.

“Our old headquarters was a liability in recruitment,” says Joel Reuter of Rolls-Royce in the report. “No one wanted to work at an office building that was built in the 1940s. … A lot of students coming out of engineering school, they’re not looking for suburbia. They’re looking for the downtown living environment.” Rolls-Royce moved 2,500 employees to an office in downtown Indianapolis in 2011.

Some of the themes that emerge in the report relate to the corporate desire to employ hip, young workers and to brand or rebrand their company cultures. Survey respondents expressed that when they were performing site searches, they looked for locations that were “live/work/play” neighborhoods, located near bars, restaurants and cafes.

Jessica Mitsch, from the Iron Yard code school in Durham, North Carolina, tells researchers that their campus has “got that kind of neighborhood-on-the-rise vibe that I think aligns really well from a tech startup brand standpoint.”

Architecture also plays a role. Many respondents mention their hunt for an open-office feel — converted warehouses and lofts impress potential workers. In addition, they take advantage of a surplus of underutilized buildings that convey local heritage.

The report’s researchers measured how walkability, access to public transit and biking shifted when these companies moved. Not all of the companies that they surveyed were relocated from a suburb. Some were relocating from a different area downtown or from another metro area. Even so, average scores for walkability increased from 52 to 88, transit scores went up from 52 to 79 and bike scores rose from 66 to 78.

“Twenty-five years ago … when you wanted to know where offices went, you basically said, ‘Where does the boss live,” says Chris Leinberger, president of Smart Growth America’s LOCUS coalition, “and the boss lived in drivable suburbs in what we called the ‘favored quarter’ — where all the rich, white folks lived.”

He says that the knowledge economy is responsible for the sea change that gives downtowns large and small a competitive advantage over car-oriented locations.

Not to be understated, the report also covers the relationship between businesses and governments. Some respondents mention financial assistance in the form of tax breaks or relocation assistance. Others talk about the “good corporate citizenship” concept, and the feeling that they are contributing to help a city rebound.

The president of the Fifth Third Bank in Detroit says that after weighing the costs and opportunities of returning downtown during the midst of the city’s bankruptcy crisis, they bet on the city’s long-term future, telling researchers, “We were the first financial institution to go back into the city when everyone else had been migrating to the suburbs. We saw it as a chance to help drive the revitalization of a major American city.”

Photo courtesy of Nora Varcho

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