For decades after World War II, families moved out of American cities in droves, and the companies eventually followed them out to the suburbs.
But now, it seems like the trend is exactly the opposite, with single millennials and young families deciding to live in urban areas, and now, in pursuit of the emerging generation of workers, companies are overwhelmingly deciding to set up shop back inside city limits.
So what gives? Why the trend reversal? It appears to come out of the different values that millennials hold compared to Baby Boomers. Having a big backyard with a pool suddenly isn’t as important as living around the corner from a farm-to-table restaurant or being able to bike to work.
Decreased Dependency
When the high costs of loan payments, insurance, parking, gas, repairs and the occasional ticket are added up, many millennials aren’t seeing much benefit in car ownership. Rather, today’s youngest workers are more likely to walk, ride a bike or take public transit to work. When you add in carshare and rideshare services like Uber, suddenly city life without a car becomes very attractive.
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Statistics are showing that car ownership among young people has plummeted in recent years and that’s bad news for companies headquartered out in the suburbs. Acknowledging this trend, many suburban office parks are now building residential units to create a campus that emulates the urban experience.
Downtown Locale
Although each urban area around the U.S. has its own cost structure, city office space tends to be more expensive than nearby suburban space. Also, there’s just less urban space available, particularly in highly developed cities like New York and Los Angeles.
In Milwaukee, class A space downtown was recently going for about $41 per square foot, while the same space just outside the city was going for about $30 per square foot.
However, the office spaces that are increasingly becoming available in cities are in retrofitted old buildings, many featuring high, lofted ceilings, exposed brick and century’s old fixtures. These kinds of environments are the ones that are currently inspiring millennials, who often want to connect to America’s past while contributing to urban revitalization.
It’s this appeal to an educated, purpose-driven and young workforce that companies should be considering when thinking about whether or not they want to be centered in a city or in the suburbs. A 2014 report from City Observatory showed the amount of college-educated people ages 25 to 34 living within three miles of city centers has leaped 37 percent since 2000, even as the overall population of these neighborhoods has dropped. As millennials delay homeownership to live an urban lifestyle afforded by renting, it will probably remain hard for businesses to attract young talent to the suburbs.
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Mid-Sized Urban Life
This trend toward an urban work-play lifestyle is perhaps most notable for the fact that it is happening outside of big cities like New York and Chicago.
In Milwaukee, HSA Bank, CorvisaCloud, Infosys and Trusted Media Brands Inc. are all recently relocated from the city’s suburbs. Large chemical producer and DuPont spin-off Chemours recently announced it would be staying in Wilmington, Del. after investigating a number of suburban options.
“We are going through a change in our workforce, and we wanted to be where we could attract millennials,” Chemours CEO Mark Vergnano told The New York Times.
