Urbanization sounds great: an all-in-one work/life/play center. Slash commuting time, forget owning a car, and entertainment right at your fingertips. Starting in the early 2000s, businesses, shops, and people moved from the suburbs towards city centers. Mixed-use developments exploded. In 2017, downtown Atlanta had 28 projects underway and Midtown started with 45 in progress or planned. Even now, many downtown cores are a maze of high-rise cranes building new facilities. Despite this trend towards urbanization, early signs are showing the suburban work center isn’t dead.
The Downtown Workforce Problem:
As employees and cities are finding, there’s a problem with the work/live/play downtown lifestyle. Space is limited. Downtown centers can’t keep up with the demand for housing and commercial space. As we know from basic economics, high demand with low supply drives up leasing rates. This limits the urban lifestyle to a higher socioeconomic class.
A packed downtown core increases crowding on already stressed transportation corridors. Parking becomes a problem, as does simply navigating the area in a vehicle. Aging downtowns lack the infrastructure to support the population influx.
Why Isn’t Downtown Working for Everyone
According to US Census Data from 2016, population growth in major cities slowed for the fifth straight year while the surrounding counties grew. Another source studied suburban neighborhoods and found all gained population from 2010-2014. What’s going on?
For lower-income workers, a downtown lifestyle isn’t affordable. Housing costs continue to rise, pushing out entry-level and even mid-level workers. Families also tend to find downtown housing unreasonable. As kids reach school-age, priorities change. Families want good schools and spaces for children’s activities. Long commutes don’t work when shutting kids between daycare, school, and extracurriculars.
Even if rent was affordable, not everyone wants to live downtown. Some people prefer the more relaxed the suburban lifestyle, open spaces, and larger living spaces.
Advantages to Suburban Office
So what are these workers gaining from the suburban office? For starters, the commute is easier and often closer to where most clients and employees live. Workers gain access to cheaper accommodation and other amenities, like great education centers for their families. Businesses benefit from lower leasing costs, allowing them to reduce operating expenses or lease a larger space.
The amenities that go along with a downtown office–nearby restaurants, entertainment, transport hubs–aren’t exclusive to downtown anymore. Suburban office parks are recognizing modern workers want these amenities. New centers are popping up close to transportation hubs. Some are attracting tenants by offering nearby fitness centers, bringing in food trucks, adding coffee lounges, and other perks. A Bloomberg article gave the example of Origin Investments, a Denver-based real-estate investment firm, that added, “a 4,000-square-foot fitness center, a “barista-driven” coffee lounge and stationed a rotating cast of food trucks outside” to an office property near Charlotte, NC.
While some sub-markets may find the suburban office park is struggling to attract tenants, major companies are starting to see the benefits to suburbia. The downtown core movement certainly isn’t over, but its luster may be waning.