Companies fleeing suburbia in favor of downtown

Last month, the Wall Street Journal ran a story titled “Companies Trade Suburbs for City Life.” The article noted that huge companies such as Expedia, Motorola, and PepsiCo had recently spurned their suburban locations for offices in more urban areas. These recent departures from sprawling office parks are nothing new; companies large and small have been relocating their offices—and their workforces—back into downtown cores for several years now, and not just to the big cities you might be thinking of. From Detroit to Chattanooga to Chicago to Las Vegas, small startup companies and giant multinational corporations alike are fleeing the suburban office park in favor of downtowns.

Why is this happening?

It used to be that companies chose to locate in office parks as the workforces of the most innovative companies preferred suburban environments with big houses, three car garages and white picket fences. But today, the housing preferences of young and talented workers are trending back towards urban cores and short commutes. The talent that businesses covet now favors urban environments with walkable cores and access to amenities rather than far-flung suburbs that require long, stress-inducing auto commutes. So, to remain competitive for top talent, companies are increasingly relocating to city centers.

On top of that, smart companies are realizing that being around other organizations and their workforces is actually good for business. Workers are more productive when they can interact with others outside of an office environment, whether they are bumping into someone they know on the street on the way to lunch or meeting a group of workers from around the neighborhood for happy hour down the street. These “chance encounters” lead to more opportunities for collaboration and innovation as well. You’re more likely to run into someone who has some valuable insight when you’re downtown amongst thousands of other people. In the suburbs, offices are secluded and insular with few opportunities to interact and collaborate with individuals outside of your office.

Smart companies are moving downtown because they want to capture the energy that comes with being in an active urban core. Happier workers, easier collaboration and a greater sense of place all make downtown an ideal location for any business, large or small.