Big Firms Trade the Suburbs for the City

December 5, 2013

Some of the largest companies in America are swapping their suburban campuses for downtown office space, betting that such a move will help them recruit new employees.

Corporate giants such as Motorola, United Continental Holdings Inc., Hillshire Brands Co., and others have recently left their suburban digs to set up shop in urban cores. Tech and online companies such as Pinterest Inc. are leaving Silicon Valley for San Francisco.  

“After decades of big businesses leaving the city for the suburbs, U.S. firms have begun a new era of corporate urbanism,” The Wall Street Journal reports. For companies that are staying put in the suburbs, some are opening up urban satellite offices so they still have a downtown presence. 

More companies are desiring to project an image of “dynamism and innovation” by having an urban presence, according to the Journal. They also want their offices near “the young, educated, and hyper-connected workers who will lead their businesses into the digital age.” 

Companies were once lured to the suburbs with tax incentives, cheaper real estate, and easy car access. But now they desire more urban amenities, such as being near public transportation, says Robert Lang, an urban planning expert and director of Brookings Mountain West.

That doesn't mean, however, that the suburbs have lost their luster for businesses. Since the beginning of 2012, suburban markets have accounted for 87 percent of office demand, according to data from CoStar Group.

Since 2011, commercial vacancy rates in central business districts have been dropping faster than the suburbs. Urban space posted vacancies of 13.9 percent in the third quarter compared to 18.5 percent in the suburbs, according to Reis Inc. data. 

Source: “Companies Say Goodbye to the 'Burbs,” The Wall Street Journal (Dec. 4, 2013)

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