Walk to Work
Urban office locations are the new employee perk.
and market observations have revealed that the new generation of employees is
clear on what they want out of the ideal office space — with many of the
preferences manifesting outside of the company’s walls. Employees want to be in
areas where there is access to other talent and work in communities that are
walkable, close to transit, and offer a compelling mix of residential,
entertainment, and business options. These employees don’t want to balance work
and life; they want it integrated. Those cities that offer this integration
will be best positioned to attract top businesses and talent.
have office space needs and wants evolved, but so has overall space usage —
presenting companies with new opportunities. The average square foot per person
in a typical office has decreased by more than 300 square feet since the 1970s.
A typical company can move from a 100,000-sf class B space to 70,000-sf class A
space, upgrading the environment for the same number of employees without affecting
its bottom line.
desire to be in higher-quality buildings and better locations, combined with
the recession and a general lack of new supply over the last five years,
presents pockets of opportunity for new office development. Many of these
development opportunities are in primary markets where fundamentals support
replacing functionally obsolete buildings. However, there will also be
opportunities in business-friendly, secondary markets driven by low business
costs, quality labor supply, friendly regulatory environments, strong economic
growth climates, and a better overall employee quality of life.
In ForbesMagazine’s 2013 list of the best American
cities for business, the No.1 ranked city is not San Francisco, New York, or
Washington, D.C.: It is Des Moines, Iowa. Provo, Utah, is No.2 and Raleigh,
N.C., is No.3 — both tech-centered cities in states with exceptionally
Tenn., and Denver take the fifth and six slots, with Salt Lake City coming in
at No.12 and Charlotte, N.C., at No.19.
The attraction of these secondary cities is not only economics but also
their renewed and re-energized urban cores.
of all sizes are seeking locations that offer access to transit, mixed-use
amenities, and overall convenience. Technology-driven flexible work days have
created a demand for access to restaurants, entertainment, other people, and
especially public transportation. Businesses now strive to offer an environment
that keeps their employees within the office area to increase productivity and
ultimately bottom-line results.
to The Walk-Up Wake-Up Call: Atlanta
by Christopher B. Leinberger, a research professor with the George Washington
University School of Business, tenants of all types are willing to pay a
premium for real estate located in walkable urban places. For example, in
Atlanta, average rents per square foot for walkable urban locations are 112
percent higher than rents for drivable suburban areas.
significant that the study focuses on Atlanta because the city has long been
viewed as the prototype for boundless urban sprawl, having no geographical
boundaries to contain development. The study notes that,
since 2009, 60 percent of new office, retail, and rental properties built in
this sprawling metropolis have been located in walkable urban places. This
represents a clear shift toward reanimated urban cores. Additionally, this
trend is not specific to Atlanta alone, but has been noted in other cities,
including Washington, D.C.
locations are also seeing increased interest from intellectual property-driven
companies that want to be in close proximity to other related industries and
innovators, thus creating clusters. The Portman Holdings’ Makers Quarter
mixed-use development in San Diego, for example, leverages the cluster
attraction by creating a hub for the region’s budding design and technology
cluster in a downtown former-warehouse district. Interest in the project has
been significant from technology- and knowledge-focused companies seeking an
area to reside for mutual benefits. Competition for technology and other
knowledge industry workers is also bringing attention to education clusters,
also frequently in urban settings, such as Raleigh.
urban office space may ultimately cost more on a price psf basis, corporations
are beginning to view their real estate office decisions holistically and
understand that they represent not a cost of doing business, but rather a tool
for doing business better. Although slightly harder to define on a spreadsheet,
these qualitative advantages translate into corporate quantitative
Charles Pinkham is vice
president of development for Portman Holdings. Contact him at
Garland is a leasing manager at Portman
Management Co. Contact him at email@example.com.