Thursday, June 16th, 2011
I think a look at the numbers would show that employment in our metro areas continues to decentralize. Brookings has labeled this phenomenon “job sprawl.” Yet America’s downtowns, particularly for its most thriving tier one cities, aren’t done yet. In fact, we’re seeing intriguing evidence that for at least certain types of employment, the downtown is again coming back into favor.
In a story titled Corporate campuses in twilight, Crain’s Chicago Business examines how companies that once decamped from the Loop in order to built large, self-contained campuses in the far flung suburbs are now reconsidering their decision:
Like the disco ball, the regional shopping mall and the McMansion, the suburban corporate headquarters campus is losing its charm.
All reflect changes in the corporate mindset that spawned the campuses dotting outer suburbia. Empire-building CEOs from the 1970s through the 1990s craved not only cheap real estate but total control of their environments. They created self-contained corporate villages that cut off employees from outside influences.
As the 21st century enters its second decade, many companies are discovering the drawbacks of the isolation they sought. Hard-to-get-to headquarters limit the talent pool a company can draw on and feed a “not-invented-here” insularity that ignores major shifts in industries and markets.
Companies seeking to tap a broader talent pool and get into the flow of innovation are looking back to the urban core. Sara Lee is only the latest suburban company to seek a new headquarters in downtown Chicago. United Airlines made the move in the past decade, as did Navteq Corp. and Allscripts Healthcare Solutions Inc. Some of the most successful local companies of recent years, like Morningstar Inc. and Accretive Health Inc., never left the city.
“The whole corporate campus seems a little dated,” says Joe Mansueto, chairman and CEO of Morningstar, who moved the company’s 1,100 headquarters workers across the Loop to a new office tower at 22 W. Washington St. two years ago without even considering a move to the suburbs. “We’ve always liked being in Chicago. It helps keep employees on the pulse of what’s happening in our society. It keeps them current with cultural trends and possibly technological ones.”
There’s a lot more to the article which I encourage you to read. Subsequent to publication, United Airlines announced it was relocating another 1,500 jobs downtown without any subsidies. This is in addition to another 1,000 new GE Capital jobs recently announced, also without subsidy.
Part of this simply reflects what I previously labeled “the big city CBD advantage.” In these large, sprawling, congested regions with good transit access to the CBD from all parts of the region, being downtown gives you access to the greatest potential labor pool, which can be very important when sourcing for specialized skills. Others are attributing this to lifestyle preferences of younger workers. Whatever the case, businesses wouldn’t be choosing to relocate these workers without a good business reason. And in these cases subsidies aren’t the reason.
Chicago isn’t the only place this is happening, incidentally. The NYT wrote about who UBS is thinking about moving back from Stamford, CT to Manhattan.
I’m not going to suggest these anecdotes undercut the job sprawl narrative, but they show that employment markets and business location markets continue to evolve, and that there’s a lot of nuance under the headline numbers. We’ll see to what extent this is the start of a serious trend.