Why American companies are moving downtown
There’s a structural shift taking place today in corporate America with companies seeing competitive advantages in having a downtown address. In recent years, hundreds of companies have moved to a walkable downtown neighborhood, according to a national survey of 500 companies released Thursday.
These urban locations are helping companies attract and retain talented workers, build their brand, consolidate operations and support business outcomes.
Those are the conclusions of “Core Values: Why American Companies are Moving Downtown,” a new report from a Washington, D.C.-based nonprofit, Smart Growth America. It was done in partnership with Cushman & Wakefield and the George Washington University School of Business’ Center for Real Estate and Urban Analysis.
The report surveyed nearly 500 companies that made a change in office space between 2010 and 2015. Of this group, 247 relocated from a suburban location (either within the metro area or from a different region), 92 opened a new downtown location, 74 relocated within downtown, 41 expanded existing downtown space, 20 consolidated a suburban or downtown location, 10 moved from a different downtown and nine were brand new companies.
“These companies chose a walkable downtown location to help them better compete for talent and resources,” Geoff Anderson, president and CEO of Smart Growth America, said in a statement.
Anderson elaborated on the report’s findings during a press briefing Wednesday before its release. “What companies are realizing, “he said, “is that they are competing on the value of place, the quality of place and how good a place a community is in which to live.”
For a growing number of workers, that value goes up when an employer is located in an urban environment close to public transit and amenities such as restaurants, shops, and housing and entertainment options.
Paula Munger, director of Business Line Research at Cushman & Wakefield, said her company sees the trend occurring across the country, in cities large and small.
Her firm noticed the trend in fall 2011, she said during the briefing, when central business districts began outperforming suburban markets. This represented a reversal of what happened in the 1960s and 70s, when companies began leaving downtown cores for suburban office campus.
“Four years later and we are seeing no let up in this trend. There are so many prongs … One is the millenials, “she said, referring to workers who in 2015 are between the ages of 18 to 34. “But it’s not just the millenials. Some employers are surprised by the mid-career level of employees who want to move downtown. “
Cities also are drawing retiring baby boomers looking to downsize their space and move closer to amenities, she added.
“It’s where the creative class wants to be,” said Christopher B. Leinberger, with George Washington University. “This is where ideas happen. Deals happen in walkable urban places, not in isolated business parks.”
The study represented over 170 specific industries. They included 15 software developers, 29 information technology companies, 45 manufacturers, 11 universities and colleges, 7 food production companies, 6 advertising agencies, and 6 oil and gas companies. The companies ranged in size from a few employees to thousands.
Some of the locations to which companies moved included Biogen to Weston, Mass.; Avison Young and Dakota Software to Cleveland; Bumblebee Seafood to San Diego; and PNC Bank to Tampa, Fla.
No Virginia locations were highlighted in the report although Richmond recently drew a suburban company when Dixon Hughes Goodman (DHG) — one of the nation’s top 20 CPA and advisory firms —announced in March that it would move its office from the Innsbrook Corporate Center in Henrico County to the James Center in downtown Richmond. The move, which will affect more than 80 of the firm’s 1,800 employees, is set for October. The firm will occupy about 21,000 square feet on the 10th floor of One James Center.
The study also includes interviews with 45 senior-level staff who shed light on the reasons behind their companies’ moves.
Adam Klein, chief strategist for American Underground in Durham, N.C., is quoted as saying: “We wanted to be in an amenity-rich environment where our employees could walk to get a cup of coffee and participate in arts, music, and the excitement of downtown. We’re able to show potential employees a cool office in the middle of downtown and that has definitely helped us recruit people.”
The full report, along with a list of companies included in the survey, is available on Smart Growth America’s website at www.smartgrowthamerica.org/core-values.