Firms move downtown and change workforce geography

Last fall, the US commercial real estate association NAIOP reported that 83 percent of office tenants want to locate in walkable, mixed-use places. A study Core Values by Smart Growth America details the far-reaching impact of that preference.

In the last 20 years—largely in the last decade—jobs in and around downtowns have risen from less than 16 percent to 23 percent of the US total, a 44 percent increase. "It is worth noting however, that this trend is actually broader," Smart Growth America (SGA) reports. "Businesses are also moving to walkable transit-oriented suburban locations—or are spurring suburban areas to become denser and more walkable."

SGA identified and interviewed nearly 500 firms nationwide that recently moved or expanded downtown. 

By far the most prominent reason companies cited for their move downtown was to help recruit and retain talented workers, notes SGA. "As companies compete for new hires and the best talent, being located in a vibrant neighborhood is considered a crucial selling point. The businesses in our study report that current and potential employees want neighborhoods with restaurants, cafes, cultural institutions, entertainment, and nightlife as well as easy access by public transportation." This motivation is particularly strong for businesses hiring millennnials—-now 18 to 34 years old.

“We are intentionally designing workplaces of the future – live/work/play environments that have an accessible orientation for employees and the neighboring community," notes a spokesperson for State Farm, which is opening a regional office with 4,500 employees in urban Tempe, Arizona. 

“I can tell you 100 percent that when we are trying to attract new talent, being downtown and having a new open office feel, and being in a much more vibrant location is a differentiator,” reports an executive with Bumble Bee Seafoods in San Diego, CA. Other reasons for businesses moving downtown include:

• To build brand identity and company culture
• To support creative collaboration
• To be closer to customers and business partners
• To centralize operations
• To support sustainable business outcomes

Overwhelmingly, the businesses were seeking places that offered 24-hour, live-work-play features with transportation options. The Walk Score, Bike Score, and Transit Score (walkscore.com) of the new locations are dramatically higher. 

This trend is occurring in metro areas of all sizes--not just places like Boston, San Francisco, New York, and Washington, DC. "Municipal leaders can learn important lessons from all of this. Many towns and cities already have walkable, downtown neighborhoods that are well-positioned to attract the companies discussed here. Those that do not can take proactive measures to create these kinds of places."

Relocating firms including software development, manufacturing, education, food production, and many other sectors. In many cases, businesses are reoccupying historic office buildings, factories, or warehouses. Bumble Bee moved to the former Showley Bros. Candy Factory—the building still bears that name. That's cool for both workers and the company brand.


Bumble Bee building in San Deigo

This trend appears to be gaining steam, and, even more than shifting residential preferences--could motivate municipalities to change their thinking on smart growth and urban form. "As this research hopefully makes clear, creating great-quality neighborhoods is an economic development strategy that can attract jobs and new businesses—in fact, it already is."

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