As urban centres become more attractive and demographics continue to favour them, corporations are shifting their head offices back downtown.
By Nicholas Kevlahan
Published August 04, 2016
The New York Times recently published a fascinating article on why corporate head offices are returning to downtown cores. Basically: downtowns are now much more attractive, Millennials want to live and work there, and not all company business needs to take place in the same location (don't need a huge corporate "campus").
Over all, Motorola Solutions will have 1,100 employees in downtown Chicago, and 1,600 still in Schaumburg. Unlike many other corporate migrants, the company did not receive any financial incentives to move, [Motorola Chief Executive Greg] Brown said.
"This was the right thing in terms of strategy," he said. "Millennials want the access and vibrancy of downtown. When we post jobs downtown, we get four or five times the response."
Interestingly, high quality public transport is key and no "free" parking is a policy.
As for G.E., executives were focused on moving to a city from the beginning of its search for a new headquarters, said Ann R. Klee, director of Boston operations and development for the company.
Along with eliminating the parking lot (workers are being encouraged to use public transit) G.E. wanted to do away with security gates and the sense of isolation that characterizes many corporate campuses.
Note that it is not just big cities like Chicago, Boston and New York. Wilmington, Delaware also plays up its urban advantages:
Jeffrey C. Flynn, director of economic development for Wilmington, said that the advantages of city life ultimately proved to be a compelling selling point.
"We're not Philadelphia," Mr. Flynn said, "but we do have an urban atmosphere."
Note that Wilmington is actually far smaller than Hamilton (City population: 112,067, Metro: 263,429 compared to Hamilton's City population of about 520,000 and metro population of 720,000).
Hamilton should have no problem doing "urban lifestyle and amenities" if it sets this as a priority.
Economist Paul Krugman has a related blog entry arguing that rather than encouraging white collar workers to telecommute from the countryside, the instant contact provided by the internet has actually encouraged people to want to live in dense urban downtowns where they can meet and interact in "meatspace".
Some more choice quotes from the main article:
Later this month, the top executive team at General Electric - whose 70-acre wooded campus in Fairfield, Conn., has embodied the quintessential suburban corporate office park since it opened in 1974 - will move to downtown Boston. When the move is completed in 2018, the renovated red brick warehouses that will form part of G.E.'s new headquarters won't even have a parking lot, let alone a spot reserved for the chief executive.
"We are going through a change in our work force, and we wanted to be where we could attract millennials," Mr. Vergnano said. "This is a group that likes to be in an urban setting, with access to public transportation. They don't want to be confined to a building with a cafeteria or be next door to a shopping center."
The article brings together many themes we've been exploring on RTH, especially the importance of transit and de-emphasizing parking and driving for millennials, but it adds concrete evidence that big blue chip corporations have understood the shift and feel they need to be downtown.
The comment about the decline of suburban "nerdistans" in favour of downtowns for start-ups also echoes recent comments by Silicon Valley venture capitalist Paul Graham.
Hamilton's policies and plans actually look pretty well-placed to capitalize of the new desirability of downtown, since Hamilton has the only real urban downtown outside Toronto in the area.
However, it is worrying that some Councillors are fighting them tooth and nail and want to turn this is into an "us versus them" issue where a thriving downtown that is not just a traffic sewer to somewhere else is somehow a direct attack on the suburbs.
Maybe they don't really want Hamilton to succeed as more than a bedroom community and are worried that these policies (and the $1 billion LRT) will actually be a success.
By stone (registered) | Posted August 04, 2016 at 08:09:36
Terry has shown his disdain for downtown on more than one occasion and obviously has an old school view of the situation(ie. "Downtown is garbage and the Mountain is awesome" when in fact both are great for completely different reasons) This shift started a while ago but we are now at the point where it is being recognized that an entire generations style of doing things is being turned on it's head and that has definitely got to sting.
Hamilton and Kitchener/Waterloo are really the only cities in Southern Ontario that can take advantage of the move to downtowns in any significant way, although this trend is going to help cities of all sizes across North America.
By jorvay (registered) | Posted August 04, 2016 at 08:15:02
This ties so well into the push for all-day go service as well. Right now there is one stop (maybe two if you count Exhibition) along the entire Lakeshore line where you can get off the train and walk to any potential place of employment. Try looking up walking directions on google maps from a suburban station along the line the nearest businesses and you start to understand that very quickly. People are interested in all-day train service to get from the Hamilton area to Union Station, but all-day is inherently two-way, meaning that there would instantly be a second stop on the Lakeshore with the density to act as a work destination and not just a commuter origin. The reality is that all-day GO service could do more for business in Hamilton than for commuters who live here.
By Borrelli (registered) | Posted August 05, 2016 at 07:20:13
I agree that it would be a powerful economic magnet on the other end of the LSW line, but the long-promised-never-delivered all-day-GO commitment is just a sop that the province keeps holding out to beleaguered West GTA'ers. At last check, wasn't all-day go seen as something that might happen in 2025? So tentative and far away that it's hard to imagine the benefits.
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