NAREIM DIALOGUES FALL 2016
19
Downtown
While major office relocations are nothing new, the quantity
of downtown relocations and the similarities behind the
worker-centric rationale is a major trend. This trend has
in large part defined the nature of the commercial real
estate recovery since the Great Recession; that is, places
that offer location attributes attractive to young, educated
workers were often the last to tank (in many cases, less
severely so) and early to recover. Conversely, locations
associated with aging workforces, generic sprawl and
less business-friendly governments still experience tepid
growth seven years into the recovery.
As a commercial real estate portfolio manager, I see
three major trends that have driven this change. First,
almost every major industry is at some level intimately
connected to technological innovation and the workers
who shape these advances. Second is the rise of the
millennial generation, including their cultural preferences
and practical implications, such as where and how they
live, work and play. Third, there is a majority of job growth
stemming primarily from knowledge workers as well as
the reduction of many workers who perform manual labor
and repetitive tasks due to automation and offshoring.
While the Great Recession (like other recessions) put a lot
of pressure on employers to retool their operations, it was
the convergence of these factors in the middle of a deep
recession that contributed to the speed of change
we see today.
What these major and many not-so-major location trends
similarly point to is a change in thinking around the role of
"talent" as a key component in business success. But how
businesses choose to maximize the benefit of their talent
depends upon a lot of factors, including average employee
age, industry type, the importance of being together and
real estate operating costs.
