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Table of ContentsExecutive Summary
Introduction
Methodology
The kinds of companies moving downtown
Where companies are moving
Walkable places
Cities of all sizes
Why companies are moving
Attracting and retaining talented workers
Supporting creative collaboration
An asset to brand identity and corporate culture
Centralizing operations
Be closer to customers, businesses partners, and service providers
Triple-bottom line
What companies are looking for in a downtown
Walkable, live/work/play neighborhoods
Convenient access by a range of transportation options
The right office space
A welcome mat
Clean, safe streets
A note to cities
Conclusion
Appendix A: Company listings
Appendix B: Strategies for cities
Endnotes
Acknowledgements
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Core Values 2
Hundreds of companies across the United States are moving to and investing in walkable downtown locations. As job migration shifts towards cities and as commercial real estate values climb in these places, a vanguard of American companies are building and expanding in walkable downtown neighborhoods.
Why are companies choosing these places? What are the competitive advantages they see in these locations? And what features do they look for when choosing a new location?
Core Values: Why American Companies are Moving Downtown examines the characteristics, motives, and preferences of companies that have either relocated, opened new offices, or expanded in walkable downtowns between 2010 and 2015. Smart Growth America partnered with global real estate advisors Cushman & Wakefield to identify nearly 500 companies that have made such a move in the past five years. Of those, we interviewed representatives from more than 40 companies to gain a better understanding of this emerging trend.
The research reveals an enormous diversity of businesses choosing to locate downtown. The companies included in our study represent over 170 specific industries, including 15 software developers and 29 information technology companies, 45 manufacturers, 11 universities and colleges, 7 food production companies, 6 advertising agencies, and 6 oil and gas companies. The group includes 52 companies on the Fortune 500, and 12 of Fortune’s “100 Best Companies to Work For” from 2015. And these companies are of all sizes, from just a few employees to thousands.
Their investments have taken a variety of forms. Our study included relocations, consolidations, expansions, as well as the creation of new offices or companies. Of the nearly 500 companies included in our research, 245 relocated from a suburban location (either within the metro area or from a different region), 91 opened a new downtown location or branch, 76 relocated within downtown, 42 expanded existing downtown office space, 20 consolidated a suburban and downtown location, 10 moved from a different downtown, and 9 were brand new companies.
These companies’ new locations are dramatically more walkable than before. The average Walk Score of companies’ previous locations was 51; the average Walk Score of the companies’ new locations is 88. Similarly, Transit Scores went from an average of 52 to 79 and Bike Scores went from an average of 66 to 78.
This trend is visible across the country, in big cities and small ones, in the middle of the country and the coasts, as well as in secondary markets within larger metropolitan areas. An online interactive map includes more information about where in the country these moves are happening.
We also explored the motivations for these companies’ moves. Smart Growth America conducted interviews with senior-level employees at these companies to understand why they chose the location they did. In the course of our interviews six common themes emerged explaining why companies chose to locate downtown:
n To attract and retain talented workers. As companies compete for new hires and the best talent, being located in a vibrant neighborhood is considered a crucial selling point. The businesses in our study report that current and potential employees want neighborhoods with restaurants, cafes, cultural institutions, entertainment, and nightlife as well as easy access by public transportation.
n To build brand identity and company culture: A downtown location projects innovation, connectedness, uniqueness, and allows companies to literally be at the center of things. For many companies, moving downtown was a way to set themselves apart from their competitors and to inspire their employees to live up to related brand aspirations.
n To support creative collaboration: Many companies chose locations in dynamic, creative, engaging neighborhoods to help inspire their employees and encourage collaboration among co-workers as well as with employees at other companies or in other industries.
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Executive Summary
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n To be closer to customers and business partners: Streamlining the process for employees who take in-person meetings with clients and partners downtown.
n To centralize operations: A central downtown location, because of its proximity to everything, was a natural choice for many companies when consolidating multiple locations, particularly if those locations were spread out over a single region.
n To support triple-bottom line business outcomes: For many companies, investing in a city’s center was an opportunity for good corporate citizenship and a way to use their sizable investing power for good. Some reported that triple-bottom line business practices came with the ancillary benefit of making them more attractive as an employer.
Common themes also emerged about what companies looked for when choosing a new location. Many interviewees said they chose vibrant, walkable neighborhoods where people want to both live and work. Companies also wanted their new location to be accessible by a range of transportation options, emphasizing in particular commuting choices for their employees as well as convenient access to the rest of the city and the region. Great office space was another important factor for these companies, and many highlighted renovated warehouses or other unique and inspired architecture that dovetailed with a desire for similar neighborhood qualities. Companies noted that a warm welcome on the part of the city—whether through outreach, a personal welcome, help with permitting, or financial incentives—also factored in to their decision making process. And finally, companies noted that a clean, safe downtown was a fundamental requirement for their choice of where to move.
Cities, for their part, can learn from this. Understanding what companies look for and why should help local leaders understand how they can compete more effectively for these businesses. Smart Growth America is dedicated to helping communities across the United States create these kinds of places. Visit www.smartgrowthamerica.org/core-values to learn more about these strategies, and how your town or city could better compete for world-class companies by using a smart growth approach.
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In Cambridge, MA in 2010, global biotechnology company Biogen moved its headquarters to a large suburban campus in Weston, a town 25 minutes outside of Cambridge. After just a few years the company reversed its decision and in 2014, the company relocated again—to two new facilities totaling 500,000 square feet of space back in the heart of Cambridge.
“Although the new facility in Weston was spectacular, Kendall Square was home to Biogen and we decided to move back,” said Chris Barr, Associate Director of Community Relations at Biogen. “Coming back to Cambridge allowed us to reunite with the rest of our campus, and there is so much going on here—it is such a vibrant place to live and work—that it’s been a great move back for us.”
In the past few years, hundreds of companies across the United States have moved to and invested in walkable, urban places. Nearly every day comes news of another company making a similar decision, and this trend represents a marked shift in the preferences of American companies.
In the late 1960s and ‘70s, companies across the country began leaving downtown cores for suburban office campuses.1 By 1996, on average less than 16 percent of jobs in a metropolitan area were located within three miles of the traditional city center, down from 63 percent as recently as 1960.2
In recent years, however, this trend is showing signs of reversing. Between 2007 and 2011, job growth in city centers grew 0.5 percent annually on average, while the city peripheries lost jobs, shrinking 0.1 percent annually. By 2013, 23 percent of metropolitan area jobs were located within 3 miles of downtown on average.3 The majority of American jobs are still located outside of central business districts—but downtowns are gaining.
Some of today’s most innovative companies are part of this emerging trend, choosing to move to, invest in, or expand in America’s walkable, urban downtowns. These companies clearly see a competitive advantage to locating in neighborhoods with a mix of offices, restaurants, and shops, with a variety of housing options close by and accessible by a range of transportation choices.
To better understand the competitive advantages of these places, this study surveys companies that either relocated to, expanded or invested in walkable downtowns between 2010 and 2015. Our survey included data from global real estate services company Cushman & Wakefield, from local chambers of commerce, and a variety of news and other publicly available sources. Of the nearly 500 companies identified in this process, we conducted interviews with senior level staff at more than 40 to understand why they chose a downtown location.
For communities seeking to attract and retain businesses and to grow their economic base, understanding this trend—understanding what businesses are looking for and why—will be important to more effectively competing for these businesses. This study sheds light on these questions by drilling down to find out what kinds of companies have moved or made new investments in downtowns, and asking those businesses what motivated them and what they looked for in their decision-making.
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“ When we decided where we were going to move, I looked at Class A buildings everywhere. I didn’t really want to move downtown—I’d heard the commute was long, that it was expensive, that it was a hassle. But our real estate broker persuaded me to come downtown and look at just one space. So I came and saw it and I have to say, it was love at first sight. It was really something that we couldn’t get in the suburbs. After that it was sort of everything in the suburbs started dropping off and we began focusing on this.”
—Brian MacKenzie President, Inforce Technologies, Cleveland, OH
Biotechnology company Biogen moved from downtown Cambridge, MA to Weston, a suburb 25 minutes away— and then back again. Photo courtesy of Biogen.
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This report is also an opportunity for corporate leaders to think about their location in a new way, and to understand the competitive advantages walkable urban neighborhoods offer. Taken together, these ideas can help companies and the cities they work in thrive for decades to come.
MethodologyThis study is not intended to be a comprehensive analysis. Other studies have used national data sets to analyze the net flow of jobs in metropolitan areas around the country.4 As mentioned briefly above, these studies have found that central business districts in net have stopped losing jobs and have instead been gaining jobs for several years. This study seeks to better describe and understand this trend.
Our research focused on walkable urban downtowns. It is worth noting however, that this trend is actually broader. Businesses are also moving to walkable transit-oriented suburban locations—or are spurring suburban areas to become denser and more walkable. Studies have shown the popularity of these locations by demonstrating significant price premiums over drivable suburban locations. This valuation premium has been increasing over the past decade and is showing no signs of leveling off.5 All this shows tremendous pent up demand and for office space in walkable locations, probably more than revealed in this study of just center city downtowns. Unfortunately, surveying all of these walkable suburban locations was beyond the scope of this study. While it is relatively easy to find examples of companies moving “downtown,” it is more difficult to find reporting on companies relocating to walkable, regional centers. This report focuses on downtowns as a result, but we believe many of the same findings apply to regional, walkable, transit-oriented centers.
This study seeks to better understand some of the details and motivations underlying the trend toward businesses locating downtown. To answer these questions we conducted extensive searches among news, trade publications, or other reports of businesses locating, relocating, or expanding in downtowns. In addition, we consulted data available from Cushman & Wakefield and conducted a limited amount of direct outreach to local chambers of commerce and economic development entities. Combined, our searching and outreach enabled us to identify the nearly 500 businesses listed in Appendix A on page 28. From this group we reached out to more than 85 businesses requesting interviews to discuss their move, resulting in 45 total interviews each of which lasted approximately 30 minutes.
The results are robust but not comprehensive. Geographically there are gaps where our list shows few downtown moves or investments. This may be because no companies moved to these places, or because moves happened but were not reported, or because moves happened but our search failed to identify them. Similarly, in communities where our list shows many moves or downtown investments, there is no reason to suppose that the list is complete: again, our searches may have missed others that occurred.
Our findings also may be affected by the size of the business moving and the size of place to which they moved. In small municipalities, a small company moving downtown might make big news and get extensive coverage in the paper—allowing us to find it through our search. This same company’s move might go unreported in a larger metropolitan area, however. The advantage of this is that for most of the firms reported on in this study, their moves were significant in the context of the community in which they were reported.
The definition of “downtown” is also localized by virtue of the methodology used. This study does not use a standard definition for “downtown.” Instead, we relied on local reporting to define downtown for their own community. However, we were able to provide some objective measure as well. For every company for which addresses were available, we have calculated the Walk Score of their previous location and their new location.
There is evidence businesses are interested in walkable locations within metropolitan areas—both downtowns and other regional centers. We are interested in knowing more about firms moving to walkable regional centers in general. However, from a methodological standpoint, the scope of this study did not allow the effort that would have been required to systematically identify firms moving to walkable, regional locations. In essence, either on the internet or in other queries it is relatively easy to search for companies moving downtown, but much more difficult to find reporting on businesses relocating to walkable, regional centers. As a result, this report focuses on downtowns but we believe many of the same findings apply to regional, walkable, transit-oriented centers.
Our process is certain to have missed business moves. If you know of a company’s move that should be included in our database, tell us about it at www.smartgrowthamerica.org/core-values.
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The kinds of companies moving downtownThe nearly 500 companies that have relocated to or expanded in walkable downtowns represent a diverse cross-section of the American economy. This group includes 52 companies on the Fortune 5006, and 12 of Fortune’s “100 Best Companies to Work For” from 2015.7 The following section provides more information about the types of companies included in our survey. For a full list of those companies, see Appendix A on page 28.
These companies represent over 170 different industries, including software development, manufacturing, education, and food production, to name just a few. Figure 1, below, summarizes the industries represented most prominently in our analysis. FIGURE 1Companies moving and expanding downtown, by industry8 Industries with fewer than 10 instances within the sample have been categorized as “Other.”
These companies are of all sizes, from just a few employees to several thousand. In downtown Conway, AR, Big Cloud Analytics opened an office of just two people (though they plan to grow in the next five years). In Tempe, AZ, State Farm Insurance’s new regional headquarters will be home to 4,500 employees—with the potential for 3,500 more.
And these companies are investing in walkable downtowns in a number of ways. Our survey included relocations, consolidations, expansions, as well as the creation of new offices or companies. Of the nearly 500 companies included in our survey, 247 relocated from a suburban location (either within the metro area or from a different region), 92 opened a new downtown location or branch, 74 relocated within downtown, 41 expanded existing downtown office space, 20 consolidated a suburban and downtown location, 10 moved from a different downtown, and 9 were brand new companies (see Figure 2).
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Professional, Scientific, and Technical ServicesInformationFinance and InsuranceManufacturingAdministrative and Support Waste Management and Remediation ServicesWholesale TradeRetail TradeEducational ServicesOther
121
5764
36
28
1614
17
61
8
FIGURE 2Relocations, expansions, and new office creation
Collectively, the companies included in this survey now occupy more than 31 million square feet of commercial real estate in the United States.9 This number is likely much greater: of the 494 companies included in this survey, square footage was available for only 307.
With average building area per employee ranging from 175 to 225 square feet, these companies have room for between 138,000 and 177,000 employees at a minimum. As with their square footage, the number of employees located downtown is also likely much higher. Taken together, these figures demonstrate the collective real estate and employment power these companies represent.
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Relocation from suburbs in the metro areaRelocation from suburbs outside metro areaNew downtown locationDowntown relocation within the metro areaExpansion of existing officeConsolidation of suburban and downtown locationsRelocation from downtown outside metro areaNew company
218
9127
76
4220
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Where companies are movingWhere are these companies choosing to go? Figure 3, below, provides an overview of where in the country these moves occurred. An interactive version of this map is available on our website at www.smartgrowthamerica.org/core-values. Visit the interactive version to explore more information about where each company moved from and where they moved to.
FIGURE 3Map of where companies are moving
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Walkable placesThese companies chose neighborhoods that are significantly more walkable than their previous locations. We calculated Walk Scores, Transit Scores, and Bike Scores for each company both before and after their moves (where sufficient address data were available). The average Walk Score of these companies’ previous locations was 51; the average Walk Score of the new locations is 88. Similarly, Transit Scores went from an average of 52 to 79. Bike Scores went from an average of 66 to 78.10
Cities of all sizesOur survey focused primarily on the country’s major metropolitan areas. As we noted in the introduction, there are likely many more moves not included in this survey that have happened in small towns, secondary markets within a given metro area, or in suburbs that are becoming more walkable.
Despite these limitations, it is clear that companies are moving not just to the country’s five or ten largest cities. Our survey found that companies are also attracted to smaller and mid-size cities. Far from being limited to Boston or San Francisco, this trend is happening in over 100 cities in more than 85 metropolitan areas and in every region of the country. Appendix A on page 28 includes a full list of the cities to which companies moved.
WALK SCORE TRANSIT SCORE BIKE SCORE
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Why companies are movingTo gain a better understanding of companies’ motives for moving downtown, Smart Growth America conducted interviews with 45 businesses from the nearly 500 identified through this project. Several themes emerged explaining why they are choosing walkable downtown locations.
Attracting and retaining talented workersBy far the most prominent reason companies cited for their move downtown was to help recruit and retain talented workers. In interview after interview, company representatives explained that a downtown location is considered a valuable recruiting asset, and has helped them attract top talent in a fiercely competitive environment. Below is a sample of what we typically heard from the businesses.
“ We considered 65 different locations for our new headquarters. In making the final decision, we asked ourselves, ‘Five to ten years from now, what’s going to allow us to attract and retain a really mission-driven workforce?’ We knew the answer to that was a neighborhood with lots of restaurants and other amenities, and better public transportation. Eventually we decided on a location right on the edge of downtown Minneapolis in a neighborhood called The North Loop. That location already has a lot of what we’re looking for and more of those amenities are in the works. We’re excited to grow our company as the neighborhood grows, too.”
— Dr. Jeff Chell, President, Be the Match Bone Marrow Center, Minneapolis, MN
“ I can tell you 100 percent that when we are trying to attract new talent, being downtown and having a new open office feel, and being in a much more vibrant location is a differentiator.” — Kent McNeil, Executive Vice President and
Chief Financial Officer, Bumble Bee Seafoods, San Diego, CA
“ We wanted to be in an amenity-rich environment where our employees could walk to get a cup of coffee and participate in arts, music, and the excitement of downtown. We’re able to show potential employees a cool office in the middle of downtown and that has definitely helped us recruit people.” — Adam Klein, Chief Strategist, American
Underground, Durham, NC
“ We are intentionally designing workplaces of the future – live/work/play environments that have an accessible orientation for employees and the neighboring community. We recognize that future generations of employees may have different expectations of their employer and their workplace, and we are taking this into consideration as we make facilities and business plans. We know that many of our new hires prefer multiple transportation options, the ability to live near where they work and to have a more live-work-play lifestyle. We already have a number of employees using public transit to get to work. We believe this number will grow if communities such as Phoenix/Tempe continue to support public transportation.” —Victor Hugo Rodriguez, Spokesperson, State Farm, Phoenix, AZ
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Bumble Bee Seafoods’ headquarters in the former Showley Bros. Candy Factory in San Diego, CA. Photo courtesy of Bumble Bee.
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MillennialsCompany spokespeople explained that downtown locations are particularly attractive to Millennials, who in 2015 are between 18 and 34 years old. This generation’s preference for walkable, urban neighborhoods has been clearly documented in other studies. According to Vishaan Chakrabarti’s A Country of Cities, 62 percent of Millennials prefer to live in the type of mixed-use neighborhoods found in urban centers where they live in close proximity to a mix of shopping, restaurants and offices.11 Millennials are much more likely to choose to locate in close in, urban neighborhoods than are other Americans in the aggregate, and they currently live in urban areas at a higher rate than any other generation.12
Millennials also behave differently when it comes to transportation. This generation is more likely to commute by biking, walking or public transportation. Millennials automobile ownership rates and overall driving are lower too. For instance, in 1995 20.8 percent of autos were driven by 21-30 year olds. According to the 2010 Federal Highway Administration Household Travel Survey, by 2009 that number had dropped to 13.7 percent.
Millennials value walkable, urban neighborhoods so highly that location has become a major factor in their job considerations. Pricewaterhouse Coopers’ survey of Millennials lists “location” as the fifth most important factor for Millennials when considering a job—behind personal opportunities for growth, company reputation, the job role, and pay.13
Why is this demographic so important? Millennials are now the largest generational segment of the American workforce, with 53.5 million people making up 34 percent of all workers—more than either Gen Xers or Baby Boomers.14 And their numbers are projected to only increase over the next several years as the youngest members graduate and enter the workforce.
Companies are positioning themselves to take advantage of this by moving to the neighborhoods where these workers want to be.
“ Our younger employees don’t want to go to a suburban office park. It’s boring as all getout out there. Here they walk outside and see cool stuff and it’s fun. I wanted to be where they wanted to be.” —Reg Shiverick, President, Dakota Software, Cleveland, OH
“ We are actively working to hire younger people and we picked our new location with that in mind. It’s a really cool, modern space and we’re right next to a university, which helps a lot. Since we moved we’ve been able to recruit four new people and for a company of twenty-five, that’s a huge step forward.” — Brian MacKenzie, President and CEO, Inforce Technologies, Cleveland, OH
“ If cost was the highest priority for us, attracting new employees was the co-highest priority. Those were our two biggest motivators. We’re in a creative industry, so being in the center of the creative culture downtown is hugely important to us. It’s the kind of energy and environment that Millennials and now the Generation Z want to be in, and it’s just something that we can’t offer out in the suburbs. We know our move downtown will make us a more attractive employer for our next generation of employees.” — Eric Pehle, Executive Vice President and General Manager in Minneapolis,
Weber Shandwick, Minneapolis, MN
Mid-career workersMid-career and senior employees are less likely than Millennials to desire walkable, downtown neighborhoods. However, a move downtown was rarely a dealbreaker for these workers and in many cases, companies were surprised by how much these more senior employees liked the new location.
“ Our younger employees fresh out of school are very excited to work downtown. But we also have more experienced employees who are settled down, have a family, and are living in the suburbs, and they’ve also been supportive of the downtown location.” —Chris Livingston, Managing Director, Avison Young, Cleveland, OH
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“ When we initially announced the move, we had resistance. People complained and didn’t see the value. Now people love it. We have downtown locations in numerous locations including Denver, San Diego, Los Angeles, Oakland, and Cambridge and in all of those locations, I would say the vast majority of people support it. Once they get to know downtown and get used to having transit options, get used to having coffee shops and restaurants nearby, they absolutely, positively love it. But it was a real education getting people to stay calm enough to give it a try.” —Bill Siegel, President and CEO, Kleinfelder, San Diego, CA
“ Initially there was some hesitation from employees about our move to One Tampa City Center. There was some concern about commute time and parking, but the benefits of being centrally located downtown, within minutes of many major businesses, restaurants and entertainment, quickly gave everyone a pretty good sense that being in the middle of the action is a good thing. Now, we’re all thrilled to be part of this vibrant, thriving community.” — Dianne Jacob, Senior Vice President of Corporate
Communications, PNC Bank, Tampa, FL
“ The biggest objection our employees have had to the new location was that there won’t be free parking. When we began considering new locations a few years ago, that was the number one reason complaint people had, the number one reason why people said, ‘Well, maybe I won’t make the transition.’ But now people are seeing the inexpensive alternatives to parking downtown and all the ways they can get to work that don’t involve parking downtown, we’re hearing nothing but good things.” — Dr. Jeff Chell, President, Be the Match Bone Marrow Center,
Minneapolis, MN
Employees in cutting edge industriesA downtown location also helped companies recruit employees from specific industries, particularly industries with fierce competition for talent like engineering, software development, and biotechnology.
“ Our old headquarters was a liability in recruitment. No one wanted to work at an office building that was built in the 1940s. It is a calling card now in our recruitment efforts, our proximity to downtown. A lot of students coming out of engineering school, they’re not looking for suburbia. They’re looking for the downtown living environment.” —Joel Reuter, Vice President of Communications, Rolls Royce, Indianapolis, IN
“ I’m an advisor to students at San Diego State University and I was there one day talking to a young guy and he said, “I hear you all just moved to a new office space.” And I said, “We did. How do you know?” And he answered, “Well, I’m an engineer and a friend of mine, who’s also an engineer, just went to work for you all. And he posted a whole bunch of pictures on Facebook of the new office and all the windows, and he said ‘Look where I get to work.’” When you have young people straight out of engineering school who are bragging about how cool it is to work at your office, you’ve hit a home run.” —Bill Siegel, President and CEO, Kleinfelder, San Diego, CA
“ We chose Austin in part because of its dynamic and growing labor pool of young computer scientists and developers.” — Bridger McGaw, Director of athenaEnvironment, athenahealth, Austin, TX
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PNC Bank’s Tampa headquarters at One Tampa City Center. Photo courtesy of Cushman & Wakefield.
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“ The old model, of going out to the suburbs and buying 100 acres and putting a fence around it, building nice lab space and having people drive in every day and talk to no one but themselves doesn’t make sense any more. The way science works today is that you have to be interactive, you have to be collaborating, you have to have access to smart people and being in the epicenter gives us access to that right outside our door. Not only for day-to-day collaboration but also for recruiting and for longer-term collaboration.” — Jeff Lockwood, Global Head of Communications,
Novartis Institutes for BioMedical Research, Cambridge, MA
“ We looked at moving to Research Triangle Park and suburban North Raleigh, but part of the reason to relocate was to grow our company and attract engaged, creative talent. When we put the models all together and looked at the cost of renovating a space downtown and what we could get out of it in terms of talent and value, downtown was by far the best option.” — Ashton Smith, Community & Employee Engagement
Project Manager, Operations, Citrix, Raleigh, NC
“ Our previous East Bay location was very suburban and bringing in top design talent was a challenge. But now the number of resumes we’re getting and the type of talent that’s coming to our door is amazing. They’re excited about Oakland and they believe in the growth in the East Bay. Being close to Cal has also been a huge benefit.” — Matin Zargari, Managing Director and Principal,
Gensler, Oakland, CA
“ Any time you said ‘Let’s move downtown,’ the energy and the enthusiasm from the people who made up the bulk of the workforce really kind of fascinated us. We came to the conclusion that we would actually attract more people with a downtown location. We’re an entrepreneurial company. It’s technology and it’s marketing. And there’s an energy about a company like ours and there’s an energy downtown brings that the suburbs does not, especially a downtown going through a renaissance. There are new restaurants coming up every day and new apartment buildings, and the city’s empty warehouses are being redeveloped into amazing spaces. It’s exciting and if that’s what you want your company to be—vibrant, energetic, and appealing to younger people who want to work in that kind of an environment—the urban, downtown areas are definitely more appealing.” —Philip Alexander, Chief Executive Officer, Brandmuscle, Cleveland, OH
“ As we were looking for a new office location we hired several people. The fact that we were going to move downtown was very appealing. Even before moving we found that it was a helpful selling point when looking for potential employees.” —Jennifer Klie, Director of Operations, BrownFlynn, Cleveland, OH
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Kleinfelder’s global headquarters in downtown San Diego’s vibrant business district. Photo courtesy of Kleinfelder.
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Supporting creative collaboration Several companies saw being downtown as a strategy for inspiring creativity and innovation among their employees. Being able to go out into a lively neighborhood and meet people from other departments, other companies, or other industries was considered an important part of staying innovative.
Several companies explained that it was easier to attract good talent if there was a community of companies working together to attract people from across the country. This would create a pool of talent they could all continue to draw on for years. Below is a sample of what we typically heard from the businesses.
“ We believe that most innovation comes from outside your industry and that being in the downtown area would help that.” —Jamie Naughton, Chief of Staff, Zappos, Las Vegas, NV
“ A lot people want to come to Cambridge because there’s just so much activity going on. People I know who work at other tech companies outside the area, come visit Cambridge and say, ‘There is so much going on here. It’s such a vibrant place to live and work.’ And I think that’s what’s really attractive to the biotech and technology community.” —Chris Barr, Associate Director of Community Relations, Biogen, Cambridge, MA
“ The investment here is 100 percent in research and scientists thrive on being able to interact and collaborate with colleagues, from the clinical space, the biotech space, the academic space. In order to have that kind of interchange you need to be in an area where those ideas are thriving constantly. And you can’t find a better place on the planet than Kendall/Central Square.” — Jeff Lockwood, Global Head of Communications, Novartis Institutes for BioMedical Research,
Cambridge, MA
“ In the suburbs you drive into the parking lot and you get in the elevator and go up to your office. You have to go out for lunch because there isn’t anything anywhere near there to walk to, so you go back and get in your car. You have no connection whatsoever to a neighborhood or even to who else might be in the building.” — Reg Shiverick, President, Dakota Software,
Cleveland, OH
“ There are probably 20 or 25 startups just within a few blocks of our office. That sort of collaborative environment—where you’re bumping into people that you know and getting together after work or to socialize—just doesn’t happen in places that are more spread out. That kind of camaraderie doesn’t happen in places where your closest colleagues are a 15 minute drive away.” — Steven Cox, Founder and CEO, TakeLessons,
San Diego, CA
“ Business networking was definitely one of the key reasons we moved. Our business is all about connecting with other business leaders, and to do that effectively you’ve got to be walking the town. Most of the businesses in our industry have been downtown for many, many years. So the ability to walk out the front door of our building and go right or left and be in the absolute heart of the city is key for what we do.” —Chris Livingston, Managing Director, Avison Young, Cleveland, OH
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American Underground moved to the campus of the former American Tobacco factory in Durham, NC. Photo by Scott Faber Photography courtesy of American Tobacco.
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An asset to brand identity and corporate cultureMany businesses said they see downtown location as an asset to their brand identity, a way to distinguish themselves from their competition. In interviews company representatives associated downtown locations with fresh energy, innovation, creativity, authenticity, and being at the center of things. Companies also sought to have their office spaces reflect those values. Many boasted about being located in converted manufacturing spaces, lofts, and other buildings with a unique history and inspiring architecture, transformed for a modern economy.
For many companies, these brand aspirations are also part of the corporate culture, bringing energy and excitement inside the office and providing more opportunities for people to socialize. Below is a sample of what we typically heard from the businesses.
“ We were originally located in a very corporate office space—our address was actually on a street
called ‘Corporate Circle.’ And when you drove up, there was no evidence that anything unique lived in that building and we didn’t want that to be our corporate identity. We wanted to create a space that felt uniquely like ‘us’ and downtown had a thriving energy that just wasn’t available in the suburbs. When we found out that Las Vegas’ city government was leaving City Hall we started asking questions and ended up securing it as our new headquarters. The move was really about maintaining and growing our culture as a company.” —Jamie Naughton, Chief of Staff, Zappos, Las Vegas, NV
“ As a part of our brand and our culture, we wanted to be in a downtown scene. There are a lot of independent restaurants and bakeries, those kinds of things, that are all within walking distance. So it’s got that kind of neighborhood-on-the-rise vibe that I think aligns really well from a tech startup brand standpoint. Tech startups like to think we’re cool and hip, and the downtown scene in Durham really aligns with that brand.” —Jessica Mitsch, Director of Global Campus Operations, The Iron Yard, Durham, NC
Core Values
Inforce Technologies moved to Cleveland’s Idea Center, located in the heart of Playhouse Square. Photo courtesy of The Downtown Cleveland Alliance
17
“ Our previous location was located in front of our industrial factories, and it just didn’t represent the direction we want to go in. We strive to be an innovative, forward-thinking company and a downtown location reflects that.” —Joel Reuter, Vice President of Communications, Rolls Royce, Indianapolis, IN
“ We’re in a premier location in Cleveland and it gave our business credibility. It said ‘We’ve made it.’” —Brian MacKenzie, President, Inforce Technologies, Cleveland, OH
“ The building we’re in is on the historic register and has this enormous, textured history. It really fits in well with our company culture and personality. And, the great views are the first thing people notice when they see our office for the first time.” —Jennifer Klie, Director of Operations, BrownFlynn, Cleveland, OH
“ We viewed our move as an opportunity to redefine the company and what our future is going to be in Southeast Michigan. Fifth Third’s tagline is “The Curious Bank”—we pride ourselves on being innovative and curious about the future. We wanted to become part of a community that embodies that spirit as well which influenced our decision to relocate downtown. The move is an intentional strategy to be in the thick of other innovative companies and business leaders, not watching from the sidelines.” —David F. Girodat, President and CEO, Fifth Third Bank, Detroit, MI
Centralizing operationsFor companies that were consolidating multiple locations, a new central location in the downtown core was a natural choice. This was particularly true if a company had multiple locations within one region. Businesses realized that when you have employees coming to work from different parts of the region, the downtown location was on the whole the easiest place for everyone to get to. Or, put another way, downtown provided the best access to the regional labor pool. Below is a sample of what we typically heard from the businesses.
“ We had three different spaces around the Westshore business district when we originally moved to the Tampa/St. Pete region. We needed to consolidate, first of all, to be actively engaged, and to have a presence in the community that was undeniable. Today, our name is on top of the building at One Tampa City Center giving us name and brand recognition in the market. Having our headquarters for all of the Florida West market of PNC in downtown Tampa and being able to make ourselves known in the business community by being able to see people and bump into them as you’re going out to lunch or to a meeting is priceless. Downtown right now is where all the action is.” —Joe Meterchick, Regional President, Florida West Region, PNC Bank, Tampa, FL
“ We wanted to consolidate in a central location. We wanted to be a player, a more well-known entity in Indianapolis.” —Joel Reuter, Communications Vice President, Rolls Royce, Indianapolis, IN
“ We have offices in several states, our Board of Directors is scattered across the country, and we have banking relationships in different states, and when people would come to see us when we were located in the suburbs in Mentor, they would always fly in to Cleveland. So we were already holding meetings in downtown Cleveland, just to make things easier on our partners. Plus we have employees who live all around the city, so we figured moving to a central location would be good for our current employees and our future as a company.” —Jim Sprague, Chief Financial Officer, Gas Natural, Cleveland, OH
“ We wanted to bring all of our associates together. We wanted to bring everyone into the center city, bring them near one another, give them comparable amenities that being in the urban core can provide.” —Brian Ellis, President and CEO of Nationwide Realty Investors, Nationwide, Columbus, OH
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“ We were getting so big that we were spread out across three buildings. And for a company that really believes in collisions and that creative ideas comes from interacting with other people, we knew we needed to bring all of our employees to one location.” — Jaime Naughton, Chief of Staff, Zappos,
Las Vegas, NV
“ Before Panasonic moved we were on a 50-acre site with buildings spread out all over creation and it took 15 minutes just to walk to a meeting. Plus, the company has an incredibly wide variety of operations, and being so spread out only made it harder for different divisions to work together. There are just innate disadvantages in that kind of situation. Now we’re in a building where within a minute or two you can get to another floor and have a meeting with different divisions and different work teams. It’s a much more collaborative and ultimately more productive working environment.” — Jim Reilly, Vice President of Corporate
Communications, Panasonic, Newark, NJ
Be closer to customers, businesses partners, and service providersFor many companies, moving downtown was about better serving their customers. A downtown location made it easier for these companies to meet with their clients, cutting down on travel time and even making things like going out to lunch easier. Other companies explained that they moved downtown to be closer to partners and other businesses their company relies on. Below is a sample of what we typically heard from the businesses.
“ Our corporate attorney is across the street from us, our accountants are down the road, anybody we need to see is within walking distance. Our banker walks to our facility. So being downtown, you get a lot of great conveniences and you eliminate a lot of windshield time. There’s a lot more efficiency down here.” —Anthony Vastardis, CEO, Dental Associates, Milwaukee, WI
“ In a city as large as Atlanta it’s important for us to be accessible to our clients, and being downtown puts us near other large businesses where we have significant relationships.“ —Mike Hurst, Regional Development Coordinator, SunTrust Bank, Atlanta, GA
“ Our old location was literally at the end of a cul-de-sac, and you had to get in a car to go everywhere. You couldn’t walk to lunch. You couldn’t walk to a park. You couldn’t do anything, I mean, there was nothing around you. From a client and teaming partners perspective, downtown was by far the best place—especially when you combine that with the fact that it was actually pretty centrally located for our employees’ commute pattern. We picked a building two blocks from the major downtown transit hub, one of the main downtown transit hubs on purpose.” —Bill Siegel, President and CEO, Kleinfelder, San Diego, CA
Core Values
Panasonic’s headquarters in downtown Newark N.J. Photo by Inhabitat via Flickr
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Triple-bottom lineSeveral companies explained that they moved to downtown to become part of a groundswell of reinvestment in a city’s center. Most saw this an act of good corporate citizenship, and an opportunity to use their sizable investing power to help a city recover and rebound.
There were some indirect perks associated with this strategy. Several companies said that responsible corporate practices help make them more attractive to Millennial workers—a crucial labor demographic, as we discussed on page 10. Millennials are more likely to care about corporate social responsibility than previous generations, and consider this a determining factor in choosing where to work. According to Deloitte Global’s 2015 Millennials survey, six in ten Millennials cite a “sense of purpose” as part of the reason they chose to work for their current employers. This number is even higher—77 percent—among connected, digitally savvy Millennials.15 Below is a sample of what we typically heard from the businesses.
“ When we came to tour some downtown office space we were welcomed in the lobby by the mayor of the city. That wasn’t the deciding factor for us, obviously, but it made a big impression. We knew that moving downtown would be meaningful for the city. So we said: ‘You know what? This is the right thing to do.’” — Philip Alexander, Founder and CEO,
Brandmuscle, Cleveland, OH
“ We are a corporate responsibility and sustainability consulting firm, so choosing where to locate our offices was an enormous opportunity for us to walk our talk. The fact that we chose a refurbished building in the center of a walkable, urban neighborhood was appealing to our employees but more importantly, it was in keeping with our mission to help companies use socially and environmentally responsible business practices.” — Jennifer Klie, Director of Operations,
BrownFlynn, Cleveland, OH
“ We were founded in downtown Columbus and at one point we had an option to move to land we owned in the suburbs. We decided to stay in the city in part because we saw it as important to central Ohio. And that manifested itself in the construction of One Nationwide Plaza and from there we’ve continued to believe in the growth of downtown, that downtown is important.” — Brian Ellis, President and CEO of Nationwide
Realty Investors, Nationwide, Columbus, OH
“ Our lease came up and we took a good look at what we had and where we wanted to go. We decided that we wanted to be a more sustainable company and a leader in innovation in the green electronics area. We found a site for our new building that’s one block from public transit at Newark Penn Station, and we built a building there with a LEED Gold-certified core and shell and Platinum-certified interiors. Since we moved, 57 percent of our employees are now taking public transportation to work so basically we have taken around 500 cars off the road every day.” —Jim Reilly, Vice President of Corporate Communications, Panasonic, Newark, NJ
Core Values
BrownFlynn is one of many companies located in Cleveland’s Terminal Tower. Photo by David Grant via Flickr.
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“ The City of Detroit was in the midst of financial turmoil when the decision was made, but that didn’t deter us. We started assessing what would it be like to be an integral part of the redevelopment as a contributor and a leader, versus being a spectator. After weighing the costs and opportunities we decided it would really be the best place for the long-term future of the company. We were the first financial institution to go back into the city when everyone else had migrating to the suburbs. We saw it as a chance to help drive the revitalization of a major American city.” —David F. Girodat, President and CEO, Fifth Third Bank, Detroit, MI
“ We had two goals: do good and do well. We need smart, young, tech savvy folks for our businesses. If you look at demographic trends that group is interested in being in urban areas across the country. To be able to compete we need to be where they want to be. We also felt like investing in the city makes good business sense. Downtown Detroit is undervalued from a real estate perspective and its available capacity allowed for large scale expansion. We recruited 6500 new team members. They are excited about being in an urban area, and being part of something bigger than the company itself.” —Matt Cullen, President and CEO, Rock Ventures LLC, Detroit, MI
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What companies are looking for in a downtownCompanies are choosing walkable downtowns because that’s where talented workers want to be. These places reinforce companies’ brand aspirations, allow them to be close to their customers and partners, support creativity among their employees, and help these companies live up to high standards of corporate responsibility.
Not all downtowns achieve these objectives equally, though. So what features do companies look for when deciding on a new location? Are there characteristics a downtown must have to be competitive for these companies’ business and investment?
In our interviews, common themes emerged about what companies look for when selecting a new location. This section discusses those themes in more detail. The points below can almost be used as a competitiveness checklist for localities. And these are strategies that can be used by urban cores, small town main streets, and regional centers alike.
Walkable, live/work/play neighborhoodsA striking number of the companies we interviewed expressed desire for walkable, live/work/play neighborhoods. These places include a vibrant mix of restaurants, cafes, shops, entertainment venues, and cultural attractions all within easy walking distance of offices. Many of these neighborhoods also include homes, making them great places to live and work.
Companies consider these amenities essential for attracting employees, an approach closely connected to Millennials’ preference to live in neighborhoods with these features.16
“ Over the past 15 years as Central and Kendall have developed, Cambridge has done a great job to make sure that when companies or developers build new lab and office space, ground-floor retail is built in. At first, most people thought it was a big pain in the neck. But it has created a real sense of place in the city and a vibrancy both during the day and in the evening. Whereas before Kendall/Central was kind of a place people would leave at the end of the work day, now people stay because there’s places to go and things to do. And as a result more people live here now, and that’s all added to the vibrancy of the area. A tip of the hat to the city for making that part of their development plans because it really impacts our employees and the city benefits, too. ”
— Jeff Lockwood, Global Head of Communications, Novartis Institutes for BioMedical Research, Cambridge, MA
“ Pittsburgh’s investment in its downtown has produced significant, real outcomes. More people are
now living downtown, there are more restaurants, more cultural opportunities, more fun by an order of magnitude. These changes have really enhanced the city—changes that emerging leaders and companies representing a 21st century Pittsburgh need to personally stand behind and support—and that is why I moved my company to this area. It’s where my people want to be and it helps to attract new employees.” —Thomas Donohoe, President, Level Interactive, Pittsburgh, PA
“ The City of Conway has a roadmap for where they see themselves in the next 20 years. They want to create a more walkable environment and become more attractive to younger folks, and ultimately that strategy is about attracting new businesses. The good news is that the city is taking the initiative to make infrastructure investments to support those goals.” —Josh Smith, Vice President of Product Strategy and Business Development, Metova, Conway, AR
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Convenient access by a range of transportation optionsThe companies we interviewed consistently emphasized convenient transportation as a priority in their decisions about where to locate. Companies want their employees to be able to travel easily to work each day, to daily meetings offsite, and to other cities.
Many of the companies we interviewed recognized the benefit of giving employees multiple transportation options for their daily travel. These companies are choosing locations that allow employees to walk, bike, and take transit as well as drive to work each day. A downtown location allowed these companies to provide more options for employees who live in the city, while also leaving many employees’ driving commute times unchanged. In addition, it made these businesses more accessible to potential new employees in the region.
Though downtowns are usually near the center of a region—and thus relatively close to everything geographically—their accessibility varies. Some may have good regional access but poor local circulation. Others may have access diminished as a result of infrastructure and land use choices, by poor connectivity, low levels of transportation system redundancy, land uses spread all over the region, over-reliance on large facilities or single modes of transportation. The businesses interviewed clearly valued downtowns where accessibility has been maximized through good connectivity and the presence of a range of transportation choices—walking, biking, transit—reach local and regional destinations. Below is a sample of what we typically heard from the businesses.
“ The access to public transit was a huge selling point for us.” —Jennifer Klie, Director of Operations, BrownFlynn, Cleveland, OH
“ Even in Texas, there’s change afoot. People are becoming more and more excited about living and working downtown, and are structuring their lives to walk more. Dallas has been ahead of the curve, with our Dallas Area Rapid Transit (DART) system … the longest light rail system in the United States. Now that DART provides service to DFW Airport, we have people coming in from all over the country and taking the train right to our front door. It’s a huge asset to have so many different ways for people to reach us.” —Ralph Hawkins, HKS Architects, Dallas TX
Core Values
Architecture firm Gensler opened a new office in downtown Oakland, CA in part for that location’s proximity to public transit. Photo by Jasper Sanidad courtesy of Gensler.
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“ Transit is the key thing that the city needs to move forward. Roads don’t pay for themselves and neither does transit, yet it needs the same level of attention and investment.” —Dianne Jacob, Senior Vice President of Corporate Communications, PNC Bank, Tampa, FL
“ Getting to downtown is just as easy as getting to the other areas. There’s regional transportation which allows many of our employees to come in on the train, and we wouldn’t have had those options if we were out in the suburbs. For many of our folks, moving downtown has made their commutes easier.” —Steven Cox, Founder and CEO, TakeLessons, San Diego, CA
“ Public transportation is a huge plus. Being so close to the 19th Street BART and many other city bus lines gives our staff the opportunity to get to work easier from all over the East Bay. Our employees like our new location and in addition, many of our clients and projects are within walking distance of our office. That’s been a game changer for us.” —Matin Zargari, Manager Director and Principal Oakland Office, Gensler, Oakland, CA
If anything, most of the companies we spoke with want more and better transit services. In cities with robust public transportation, companies consider the service a crucial part of their daily operations. In cities with lower levels of transit service, many companies expressed desire to see it improve.
“ Transportation is huge. We chose a location just three blocks from the Raleigh Amtrak station, in large part to help us stay connected to entrepreneurial communities in places like Durham and Chapel Hill. Effective transportation is definitely an area that we, as a region, have to work on improving. Ideally transit within the city and within the region would both be better.” —Ashton Smith, Community & Employee Engagement Project Manager, Operations, Citrix, Raleigh, NC
“ The Red Line that runs right through Cambridge requires updating to meet the needs of the current economy in Massachusetts. There is quite a bit of traffic congestion in the area, so the ability to reduce the amount of cars on the roads is very important and mass transit plays a major part. The MBTA is not just a transportation system but rather a catalyst for the local economy.” —Chris Barr, Associate Director of Community Relations, Biogen, Cambridge, MA
“ I wish we had more alternative modes of transportation because if we did, it would be a difference-maker for downtown. It would be another amenity we could offer to our employees. So I wish we had it.” —Brian Ellis, President and CEO of Nationwide Realty Investors, Nationwide, Columbus, OH
“ We have great options on public transportation, options that we simply did not have before. The real growth of bus rapid transit from the suburbs into downtown Minneapolis, the emergence of light rail transit, better bike routes, and more of our employee base living closer to downtown made it a really easy decision.” —Eric Pehle, Executive Vice President and General Manager in Minneapolis, Weber Shandwick, Minneapolis, MN
The right office spaceAnother factor in companies’ decisions are office spaces that best fit their business. Our interviews revealed some commonalities among the companies: many reported a need for more open office space that would allow and encourage interactions among their employees. Several reported that a great space, along with a great neighborhood, went a long way in recruiting new employees. And like their choice of location, businesses wanted their office space to reflect an innovative and creative company culture. If the right type of office space wasn’t already available, many companies were willing to build new buildings or redevelop old ones to get it. Below is a sample of what we typically heard from the businesses.
Core Values
24Core Values
“ Our new building is going to be on a site that for 100 years was home to a printing company. People are pretty positive about the fact that we’re taking a 70+ year old building that had been used for industrial purposes and replacing it with a high tech healthcare company, and going from a building for 40 or 50 employees to one that’s now going to have 900. The city really helped make this new location possible.” —Dr. Jeff Chell, President, Be the Match Bone Marrow Center, Minneapolis, MN
“ We transformed an abandoned warehouse into a 170,000 square-foot new-generation workplace, and in a lot of ways it reflects our values as a company: it’s flexible, creative, collaborative, design-led, and supports a healthy, balanced culture among our employees. In addition to being a world class facility for our employees, we also saw the redevelopment as a socially responsible investment in the community. Overall it’s been an invaluable tool in recruiting new hires and competing with other companies, but we also feel like we have played a role in expanding Raleigh’s presence in the tech business landscape.” —Ashton Smith, Community & Employee Engagement Project Manager, Operations, Citrix, Raleigh, NC
“ A modern office space goes hand in hand with the downtown lifestyle discussion. People are often resistant to change, but that doesn’t mean you shouldn’t grow and improve as a company.” — Eric Nordeen, Principal, Ascendant Holdings,
Milwaukee, WI
“ Being downtown was an important aspect of our company’s brand and culture, and we wanted our offices to reflect that as well. We looked at a lot of different potential office spaces, and ultimately decided on a complex of old warehouse buildings that had been renovated. The new space met our needs and reflected our vision as a company.” — Jessica Mitsch, Director of Global Campus
Operations, The Iron Yard, Durham, NC
A welcome matSome of the companies we interviewed explained that help from the cities themselves was part of their decision to relocate or expand. This help included everything from financial incentives—like tax breaks or relocation assistance—to help with construction permitting and business licensing or small business incubation services. Even simple things like a personal welcome, a tour or orientation of a new city, or a proactive invitation to check out a new place made a difference for some companies.
Fewer than half of the companies we interviewed reported receiving direct financial assistance. And interestingly, local norms seemed to play a large role in this. Business incentives seemed to be grouped by state with localities in some states consistently providing incentives, while businesses in other states rarely received financial assistance. In addition, the companies had varying views on these incentives. Some said financial incentives were key, others said they were somewhat helpful, and many said they were unimportant—that the company would have moved downtown anyway. In some cases, companies didn’t know financial assistance was available until after they decided on a new location. Below is a sample of what we typically heard from the businesses.
“ As a company, when you move you’re worried about your employees, all your data and operations being transferred correctly, and keeping businesses going in the midst of it all. The last thing you want is to have to fight through a bureaucratic process in your new city. We want to make our home here, and ideally the city wants the same.” —Anonymous
Citrix redeveloped a formerly abandoned warehouse in downtown Raleigh into a 170,000 square foot modern workspace. Photo courtesy of Citrix.
25Core Values
“ We wanted a place that would be conducive to getting the job done and also a place where our employees feel comfortable living their life. The Downtown Cleveland Alliance helped us feel like this was a place where our employees would be comfortable. And it wasn’t necessarily big gestures that achieved that. They gave us a packet of materials about things going on downtown—festivals, cultural events, even just yoga classes. It made us more confident that our employees would feel welcome here.” —Jim Sprague, Chief Financial Officer, Gas Natural, Cleveland, OH
“ The Conway Chamber of Commerce and the Arkansas Economic Development Corporation were both very supportive of our move. They went above and beyond to make the process easy. They guided us through everything and that made a world of difference to us. I don’t know if we would have pursued the move had they not been so supportive.” —Bryan Throckmorton, Chief Revenue Officer, Big Cloud Analytics, Conway, AR
“ The City of Indianapolis did a lot to make our move easier. Even things like helping us with permitting for signage, etc. to make the transition smoother. They also provided support through the ‘City Way’ project that is bringing development and amenities to the neighborhood around the Rolls Royce campus.” —Joel Reuter, Communications Director, Rolls Royce, Indianapolis, IN
Clean, safe streetsA few companies meant to be positive when describing their new location as “gritty,” but these companies were the exception, not the rule. Most interviewees said cleanliness and safety were important to them and for the most part, the downtowns they moved to were providing it. Some companies went out of their way to point out the differences between perception and reality in this regard, particularly among employees who hadn’t been downtown for many years. Leadership on these issues was found in both the public and private sector. Below is a sample of what we typically heard from the businesses.
“ Cleveland had gone through a really tough period of disinvestment, especially in our downtown. In 2006, many of the property owners downtown decided to get proactive to protect their investments, and creating a cleaner, safer downtown was the first step in that effort. That’s how the Downtown Cleveland Alliance was started. Fast forward five years to 2011 and the streets of Cleveland were cleaner, felt safer, and so we did even more. We started putting on events, beautifying the green spaces, and we added a business development center. Now, our focus has shifted to attracting and retaining businesses downtown, and marketing Cleveland around the region and around the world.” —Ryan Manthey, Downtown Cleveland Alliance, Cleveland, OH
“ I never really came downtown because there wasn’t a whole lot of reason to. And when I came down to look at office spaces I was actually shocked at how much has gone on in the last few years. I think a lot of people really need to do that. Too many people have the perception of what downtown Cleveland was like 10 years ago, and it’s massively different—in all positive ways.” —Brian MacKenzie, President and CEO, Inforce Technologies, Cleveland, OH
“ Detroit’s city government is in a tough situation, to say the least. The companies downtown knew that if we wanted the area to be more inviting, we were going to have to do it ourselves. So we created a business improvement district (BID) and a tax assessment district. Now all the businesses in the BID contribute to the effort and it’s really done a lot to help make the neighborhood more welcoming. The second part now is changing people’s perceptions of downtown. We’ve done dinner tours on the People Mover, and one day I took 240 director-level company representatives and did a bus tour of the city’s gems. That’s a lot of what has driven a lot of the success in the city. We now have over 7,000 employees in this 3 block radius and they’re walking back and forth and spending money and going out at night, and that has helped create an amazing restaurant scene. It has really transformed the neighborhood. —Tricia Keith, Senior Vice President and Corporate Secretary, Blue Cross Blue Shield, Detroit, MI
Core Values X
A note to citiesAs the interviews in this study made clear, companies are looking for walkable, live/work/play neighborhoods with transportation choices, unique office spaces, and a clean, safe environment.
Any municipality can create the kinds of places these companies seek. Many towns and cities already have the kinds of neighborhoods these companies are looking for. Not all do. However, any municipality can create the kinds of places these companies seek. For cities that want to attract these kinds of companies, creating great, quality neighborhoods is an economic development strategy that cannot be ignored.
Better urban planning, zoning, design, housing, infrastructure investment, public arts, historic preservation, multi-modal transportation, BIDs, public-private partnerships, and community engagement are all part of this approach to economic development. Taken together, this is what we refer to as a smart growth approach, and cities across the country are already using these strategies to win the competition for new businesses, residents, and investment.
A smart growth approach to development can create a durable economic asset for a community: after all, a company that received tax breaks may move away but a great neighborhood will keep attracting businesses over and over. A smart growth approach can help municipalities create the places where companies of all sizes want to locate. Plenty of cities across the country already use these strategies, and they are helping those cities become more attractive to companies and the people those companies want to employ.
When considering where to move, the companies in this survey looked not for the lowest cost option but for the best value for their money. And they measured that value in how attractive a place is to their target workforce, how it fits with their brand and company culture, whether it has office spaces that suit their needs, whether it allows them to reach business partners easily, and whether it is an opportunity to contribute to greater social gains.
These companies are moving to locations that are great places to live, not just work—and any municipality can take steps to create these kinds of neighborhoods. Smart Growth America is dedicated to helping communities across the United States create these kinds of places. Appendix B on page 34 has several ideas to get you started. Visit swww.smartgrowthamerica.org/core-values to learn more about these strategies, and how your town or city could better compete for world-class companies by using a smart growth approach.
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ConclusionCompanies across the country want to be in walkable, downtown neighborhoods. This report highlights just some of the many companies at the forefront of this emerging trend.
This trend is happening with companies of all sizes—from just a few people to many thousand. They represent a diverse variety of industries, and include everything from startups to some of the most successful companies in the country. They are moving not just to big cities on the coasts, but to mid-size cities in nearly every state in the nation.
Companies’ motivations for these moves are diverse. Many chose downtown to attract and retain talented workers. Some want to reinforce their brand identity or to create a dynamic company culture. Some want the creativity and opportunity for collaboration a downtown location provides. Some want to be closer to customers or partners or to centralize operations. And some want to use their sizable investing power to support a city’s renaissance and other triple-bottom-line business outcomes. The companies included in our survey see competitive advantages in each of these. Other companies considering where to move would do well to consider these points when deciding on a new location.
Though their motives are diverse, common themes emerged about what these companies looked for when choosing a new location. Nearly all opted for vibrant, walkable neighborhoods where people want to both live and work. Some companies emphasized having a range of transportation options, with easy commutes for employees living in the suburbs as well as downtown. Great office space was another important factor, and many companies highlighted unique and inspired architecture that dovetailed with a broader company emphasis on creativity. A warm welcome from the city also factored in to many companies’ decision making process. And finally, companies explained that a clean, safe downtown was a fundamental requirement for their choice of where to move.
Municipal leaders can learn important lessons from all of this. Many towns and cities already have walkable, downtown neighborhoods that are well-positioned to attract the companies discussed here. Those that do not can take proactive measures to create these kinds of places. As this research hopefully makes clear, creating great-quality neighborhoods is an economic development strategy that can attract jobs and new businesses—in fact, it already is.
27Core Values
Appendix A: Company listings
Table A-1, below, includes the full list of companies included in our survey. It also includes the year of these companies’ moves or expansions, their previous addresses, their new addresses, the total square footage of their new offices, the companies’ North American Industry Classification System (NAICS) code as well as that code’s official description, and the Walk Score, Transit Score, and Bike Score for each company’s previous and new address, where data were available.
Table A-1 also notes the nine types of move or investment included in our survey in column three. To keep the table concise, we have assigned each type of move a number key, which correspond to the following:
1. New downtown location of a suburb-based company; 2. New downtown location of a company based in another city; 3. Expansion of existing downtown offices; 4. New company; 5. Downtown relocation within the metro area; 6. Relocation from suburbs within the metro area; 7. Relocation from suburbs outside the metro area; 8. Consolidation of suburban and downtown locations; 9. Relocation from another city.
For some companies, previous addresses are not listed. This is either because it was a new company; a new location of an existing company; or because we were unable to find the information.
28Core Values
Core Values X
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Core Values X39
Appendix B: Strategies for citiesWhen deciding where to relocate, the companies included in this survey looked for things like walkable live/work/play neighborhoods, convenient access by a range of transportation options, the right office space, a welcome mat from the city, and a clean, safe neighborhood.
Towns and cities can proactively create the kinds of neighborhoods these companies want. Here are some specific policy and programmatic ways towns and cities can create these kinds of features.
Walkable live/work/play neighborhoods n Update zoning codes to facilitate a mix of uses. Downtown neighborhoods thrive when people
can live, work, shop, dine, and relax all in the same neighborhood. Many times, however, zoning codes can restrict mixed uses like these. Make sure your zoning codes do not prohibit this kind of approach.
n Support diverse retail. Neighborhoods should include a mix of retail options that both serves the needs of residents with things like dry cleaners, groceries, drugstores, and hardware stores, and attracts visitors with entertainment venues and destination retail.
n Encourage more housing downtown. Adding different types of housing downtown captures the growing demand for urban living and also supports the other amenities companies are looking for. Many of the uses that people seek out in walkable downtowns—restaurants, shopping, entertainment—are more likely to thrive if customers are available on evenings and weekends.
n Plan for a mix of housing affordable to the workforce you anticipate. Providing the right balance of jobs and housing, so that people can afford to live near their jobs, helps employers recruit and retain people. This is true of highly paid jobs as well as lower-wage retail and service jobs that are essential to live/work/play downtowns.
n Invest in public spaces. Landmark public spaces provide places for the different types of programming that are critical to bringing people downtown on evenings and weekends. Parks and plazas become critical open space for downtown workers and residents, but they also allow for farmers markets, and seasonal festivals. Arts venues, whether enclosed theatres or open-air auditoriums, can also draw people downtown to shop and dine.
n Program public spaces. Create reasons for people to come to downtown neighborhoods on evenings and weekends. Farmers markets have been one of the fastest-growing and most visible types of programming recently. Arts and crafts fairs, celebrations of local food and drink, and historical and cultural celebrations can all enliven the downtown while creating a sense of place.
Convenient access by a range of transportation options n Prioritize access within the downtown area instead of mobility through it. Once people get
downtown, the purpose of the transportation system should be to help them find their destinations and discover new places they want to visit. Wayfinding signs, slower speeds, parking management strategies, and circulator transit are all tools that facilitate access.
n Manage parking. Parking spaces are valuable resources that require strategic management to ensure the right mix of long-term (employee) parking with short-term (customer) parking in the right places and at the right times. Building new structured parking is expensive, but it may be a wise investment for communities seeking to improve walkability and increase vitality of the street by replacing surface lots with new structures. Parking management strategies include pricing policies that encourage employees to park in appropriate locations - for instance, in a structure or further away from a retail street - and help customers find their way to a convenient off-street space or to their destination from off-street parking spaces.
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n Use a Complete Streets approach to transportation planning and construction. Walking is the primary way to get around a thriving live/work/play neighborhood, with biking and motorized transportation playing important supportive roles. By ensuring safety and access for all users, Complete Streets approaches support these neighborhoods.
n Provide great transit service. Convenient, safe, attractive transit choices are a deciding factor for many workers, and thus an important consideration for employers looking at downtown locations. This dynamic is why many communities treat transit as an economic development investment as much as a transportation program, devoting resources such as payroll taxes and tax increment financing to support it.
n Encourage development near transit. The land around transit stations is a critical asset that should be developed and marketed to meet community goals, including affordable housing.
The right office space n Understand redevelopment opportunities. Inventory downtown properties that are ripe for
redevelopment. For each property, compile information about condition, ownership, tax status, liens, zoning, and any other information that a new owner might need to understand costs of acquisition. Consider working with property owners to understand willingness to sell, ability to finance redevelopment, etc.
n Provide information. Make it easy to find information about required permits for different levels of retrofit. Some communities have fact sheets and brochures for new businesses that provide basic information about the process and contact information for planning officials.
n Work with companies that wish to build, redevelop, or rehabilitate downtown. Facilitate the company’s interactions with the municipality by organizing meetings with multiple agencies at once to understand permitting requirements and processes. Help resolve issues if codes and ordinances are inadvertently blocking or delaying progress. Expedite permits, inspections, and other decisions wherever possible.
A welcome mat n Promote downtown. Let businesses know what you community has to offer companies seeking
downtown locations, including live/work/play neighborhoods, transportation choices, and support for new businesses. Issue quarterly reports of new downtown businesses and ribbon cuttings.
n Create a culture of hospitality. Welcoming prospective companies makes an impact. Assign staff to focus on outreach and follow-up, or work with a local Chamber of Commerce or other business development organization to provide personal contacts.
n Organize events and media buys to welcome new and prospective businesses to the community.
n Proactively recruit new businesses. Identify businesses in the suburbs that are expanding or whose leases are expiring, and discuss whether downtown may provide a good fit for their needs.
n Coordinate on financial opportunities with the state economic development agency. Understand what incentives may already be available to support relocation of existing businesses in the state.
n Emphasize attractive loans over grants and tax credits. Low-interest, long-term loans for start-up costs, including physical improvements to buildings and infrastructure, are better investments of public money that may be most appealing to smaller, less well-capitalized businesses.
n Condition grants and tax credits on achievement of community goals. For instance, one community provides a grant based on the size of a company’s workforce, writing a check for $5000 for every $1 million in annual payroll.
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A clean, safe neighborhood n Organize highly-visible teams to keep clean and monitor the downtown business area. In
many communities, Business Improvement Districts take on these duties, but in communities where that is not the case local municipalities can focus existing resources on targeted areas, using distinctive branding (uniforms, signage) to draw attention to the work going on and the municipality’s focus on the business environment.
n Invest in the streetscape. The condition of the public spaces in front of buildings - streets, sidewalks, and building facades - signal what the city thinks is important and give passersby a clue about what is going on inside. Facade-improvement grants and streetscape improvement programs not only increase attractiveness of key business districts, but also safety as street activity increases.
Find out more ideas for how your city can use a smart growth approach to downtown development on our website, www.smartgrowthamerica.org.
Endnotes1 Mozingo, L. (2014, May). Pastoral Capitalism. Cambridge, MA: MIT Press.2 Glaeser, E., Kahn, M. (2001, February). “Decentralized Employment and the Transformation of the American City.” National Bureau of
Economic Research. Retrieved May 1, 2015 from http://www.nber.org/papers/w8117.pdf. 3 Kneebone, E. (2013, April). “Job Sprawl Stalls: The Great Recession and Metropolitan Employment Location.” Brookings Institution. Retrieved
May 1, 2015 from http://www.brookings.edu/~/media/research/files/reports/2013/04/18-job-sprawl-kneebone/srvy_jobsprawl.pdf. 4 Cortright, J. (2015, Februrary 23). Surging City Center Job Growth. City Observatory. Retrieved May 22, 2015 from http://
cityobservatory.org/wp-content/uploads/2015/02/Surging-City-Center-Jobs.pdf. Kneebone, E. (2013, April). “Job Sprawl Stalls: The Great Recession and Metropolitan Employment Location.” The Brookings Institution.
Retrieved May 22, 2015 from http://www.brookings.edu/~/media/research/files/reports/2013/04/18-job-sprawl-kneebone/srvy_jobsprawl.pdf.
5 Leinberger, C. and Lynch, P. (2014, June 17). Foot Traffic Ahead. LOCUS: Responsible Real Estate Developers and Investors and The George Washington University School of Business Center for Real Estate and Urban Analysis. Retrieved May 22, 2015 from http://www.smartgrowthamerica.org/documents/foot-traffic-ahead.pdf.
6 “Fortune 500 2014.” (N.D.). Fortune. Retrieved June 1, 2015 from http://fortune.com/fortune500/2014. The companies from that list included in this survey: AECOM Technology Corporation; Amazon.com; American International Group; Amgen Inc.; Archer Daniels Midland; Baxter International Inc.; Biogen Idec Inc.; Cablevision Systems Corporation; CBRE Group, Inc.; Cisco Systems, Inc.; Comcast; Cummins Inc.; Discover Financial Services; eBay Inc.; Facebook, Inc.; Fifth Third Bancorp; General Electric; Google; HCA Holdings, Inc.; Hess Corporation; Intel Corporation; International Business Machines; Jacobs Engineering Group Inc.; Kindred Healthcare, Inc.; Kraft Foods Group, Inc.; Liberty Mutual Holding Company Inc.; Lockheed Martin Corporation; McDonald’s Corporation; Microsoft; Molina Healthcare, Inc.; Morgan Stanley; Motorola Solutions, Inc.; Nationwide Mutual Insurance Co.; NCR Corporation; Northwestern Mutual Life Insurance Company,Inc.; PepsiCo; Pfizer; Principal Financial Group, Inc.; Prudential Financial, Inc.; Sempra Energy; Starwood Hotels & Resorts Worldwide, Inc.; State Farm Insurance Cos.; State Street Corporation; SunTrust Banks, Inc.; The Coca-Cola Company; The Goldman Sachs Group, Inc.; The PNC Financial Services Group, Inc.; The Walt Disney Company; Visa Inc.; Walgreen Co.; Wells Fargo; Weyerhaeuser Company.
7 “100 Best Companies to Work For.” (2015, February). Fortune. Retrieved June 1, 2015 from http://fortune.com/best-companies/. The companies from that list included in this survey: Autodesk; Cisco; Deloitte; Goldman Sachs Group; Google; Nationwide Mutual Insurance; PricewaterhouseCoopers; Quicken Loans; salesforce; Twitter; Zappos.com.
8 Industry designations are taken from the U.S. Census Bureau’s North American Industry Classification System (two-digit classification). NAICS codes were available for a total of 414 companies included in our survey.
9 See Appendix A on page 23.10 Walk Scores, Transit Scores, and Bike Scores were calculated for every company with address data available. Walk Scores went from
51.85843373 to 87.6809816; Transit Scores went from 51.74468085 to 79.25706215; Bike Scores went from 66 to 78. Individual scores for all companies that had data available are listed in Appendix A on page 23.
11 Chakrabarti, V. (2013.) A Country of Cities: A Manifesto for an Urban America. Metropolis Books. Via Nielsen. (2014, February). Millennials: Breaking the Myth. Retrieved May 11, 2015 from http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2014%20Reports/nielsen-millennial-report-feb-2014.pdf.
12 Cortright, J. The Young and Restless and the Nation’s Cities. City Observatory. 2014, October. Available at http://cityobservatory.org/wp-content/uploads/2014/10/YNR-Report-Final.pdf.
13 Pricewaterhouse Coopers. “Millennials at work: Reshaping the workplace.” Retrieved May 11, 2015 from https://www.pwc.com/en_M1/m1/services/consulting/documents/millennials-at-work.pdf.
14 Fry, R. (2015, May 11). “Millennials surpass Gen Xers as the largest generation in U.S. labor force.” Pew Research Center. Retrieved May 11, 2015 at http://www.pewresearch.org/fact-tank/2015/05/11/millennials-surpass-gen-xers-as-the-largest-generation-in-u-s-labor-force/.
15 Deloitte. (2015). “Mind the gaps: The 2015 Deloitte Millennial Survey.” Retrieved May 12, 2015 from http://www2.deloitte.com/content/dam/Deloitte/global/Documents/About-Deloitte/gx-wef-2015-millennial-survey-executivesummary.pdf.
16 Cortright, J. The Young and Restless and the Nation’s Cities. City Observatory. 2014, October. Available at http://cityobservatory.org/wp-content/uploads/2014/10/YNR-Report-Final.pdf.
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AcknowledgmentsOur acknowledgements must start with the over 200 people who spoke with us as part of this research. Thank you to the company representatives and economic development professionals who sat for interviews as part of the project, as well as to the city staff who helped introduce and connect us to the people included in this report. Our work would not have been possible without your help.
This research was conducted by a team of Smart Growth America staff including Geoff Anderson, President and CEO; Sarah Absetz, Policy Associate; Alex Cox, Policy Associate; Alex Dodds, Communications Director; Shelly Hazle, Deputy Director of Policy Development and Implementation; Jeri Mintzer, Government Affairs Associate; Emily Vaughan, Policy Associate; Elizabeth Schilling, Senior Policy Manager; and Christopher Zimmerman, Vice President for Economic Development. Thanks also to the additional staff members who assisted with this research over the course of the project.
Smart Growth America’s research partner on this report is Cushman & Wakefield, a global real estate services company. Thank you in particular to Paula Munger, Director of Business Line Research, for her extensive help collecting data and conducting analysis. Thanks also to Michael McDermott, Consulting Manager of Global Business Consulting, and Maria Sicola, Executive Managing Director and Head of Americas Research, for their editorial feedback on this project.
Thank you also to Christopher Leinberger, President of Smart Growth America’s LOCUS coalition and Charles Bendit Distinguished Scholar and Research Professor and Chair of the Center for Real Estate and Urban Analysis at the George Washington University School of Business for his strategic guidance in the framing of this research.
Finally, thank you to Walk Score and Aleisha Jacobson in particular for help calculating Walk Scores, Bike Scores, and Transit Scores for the companies included in this research.
This research was released in Washington, DC on June 18, 2015.
Core Values
Smart Growth America is the only national organization dedicated to researching, advocating for and leading coalitions to bring better development to more communities nationwide. From providing more sidewalks to ensuring more homes are built near public transportation or that productive farms remain a part of our communities, smart growth helps make sure people across the nation can live in great neighborhoods.
1707 L St. NW Suite 250, Washington, DC 20036202-207-3355
www.smartgrowthamerica.org
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