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June 24, 2021

RE:location: The suburban shift: Adapting to the changing tides

The disruption of the pandemic has forced us to rethink all aspects of the future of work, with location playing a leading role. Will companies migrate or stay in city centers as they plan their post-Covid work environment?

Office location is one of the questions keeping decision-makers up at night. While real estate strategies were shifting prior to the pandemic, trends have accelerated as the pandemic has triggered new modes of work. With workforces proving they can successfully work remotely, companies are rethinking their workplace models to include a broader range of office alternatives.  

Why the suburbs, why now? 

Prior to the pandemic, many of the world’s leading workplaces were designed to be a “one-stop-shop"a model that encouraged thousands of employees to commute five days a week to work with generous on-site benefits. Now that flexibility and choice are at the forefront of everyone’s minds, companies are exploring strategies to engage and motivate employees. By pivoting from the mindset of combining work and home lives to aligning home, work and play with different locations, companies can provide their teams with the environments to do their best work.

Maturing millennials  

With the Millennial generation accounting for over a third of the US labor force and being one of the largest quality talent pools, companies have historically designed office space with their demographic in minda prime downtown location and college-like perks. However, as millennials continue to age, their priorities have shifted from the excitement and amenities the city offers to the security, economic and lifestyle benefits of the suburbs. Pre-pandemic, this migration may have caused workers to look for job opportunities closer to home with shorter commutes and a better work/life balance. Now, companies are considering hybrid approaches or expanding their footprints closer to their workforces. Just as companies followed top talent into the cities, they may follow them to the burbs. 

Convenience 

The allure of the suburbsits access to open space, affordability, high-quality neighborhoods and family and friendshas drawn many workers to reside outside of the city. The pandemic has accelerated this migration as teams continue to work remotely and proximity to office location becomes less of a priority. Tech giants like Amazon, Google and Facebook have picked up on this growing trend, developing HQ2s or supplementary workplaces in suburban locations. This intentional diversification of office locations with “live-work” campuses or extending their reach to secondary areas support the appeal to millennials and the attraction of the best talent.

As companies re-evaluate their real estate strategies in favor of flexibility, suburban office space provides an attractive alternative. While HQs may remain the branding and decision-making homes, investing in outer city hubs can encourage workers to remain local while meeting talent where they want to live.

Integrated technology 

Technology has fast-tracked teams to be able to communicate and be productive remotely, causing many companies to consider a hybrid model as their future workplace strategy. This has given staff more choice and flexibility when it comes to where to live and work. As lifestyle amenities like space and access to nature replace the importance of physical proximity to the office and others, the suburbs have become increasingly more attractive. With access to the proper tools like virtual platforms, AI-driven solutions, apps and other tech resources, people will continue to relocate to areas that provide them with the best of both worlds. In turn companies will need to find the balance between the two worlds we now inhabit: the physical and the digital. 

CRE market performance 

As workforces relocate to less dense areas, it’s no surprise that suburban commercial real estate demand has risen, especially near transit hubs and walkable amenities. With attractive leasing opportunities, access to parking and proximity to talent, companies can benefit from allocating a portion of their occupancy in the suburbs. This trend is expected to continue as the need for suburban collaboration space grows, hybrid working becomes the post-pandemic workplace strategy, and technology enables a more distributed workforce.  

Secondary and tertiary markets are on the rise as well, following talent forces and more affordable real estate. Cities like Austin, Orlando, Phoenix, Nashville and Charlotte have seen more than 200% population increases as household compositions and quality of life goals change. This corporate and residential growth has increased the demand for industrial space as companies look to decrease their overhead and expand their horizons. 

The shift is here to stay

The “flight from density” or the “urban shuffle” has been a trend in the making since the Great Recession. Accelerated by Covid-19 and nurtured by WFH, technology, affordability, convenience and other factors, the general shift to the suburbs is a trend that will continue.

Looking for more on location trends? Stay tuned for our next article, The urban shift: Diversifying live, work and play.

Whether it’s repurposing your urban space, opening suburban hubs, or shifting to a model across different locations, Propeller can provide you with the playbook to move forward confidently.

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