Major corporations, including McDonald’s Corp., have recently announced their intention to move their offices from suburbs to city centers. McDonald’s cited an investment in their talent and growing closer to customers as reasons for the move, according to Chicago Sun-Times. And they aren’t alone. Many companies in recent years have opted to relocate their headquarters back into the city, as more workers express interest in urban living. In 2014, Nielsen’s data shows that U.S. city growth outpaced other areas for the first time since the 1920s.
“Increasingly, labor and considerations around talent are really what’s driving real estate decisions these days for all types of different operations,” said Mark Seeley, senior vice president of the labor analytics team at CBRE Group Inc., a commercial real estate company based in Los Angeles. Companies are being much more thoughtful than in the past about locations and how that can enable their ability to acquire talent. “Market conditions are forcing companies to be much more strategic,” Seeley said. “They can’t just assume that if they’re a large company with a great brand, they can just plop a building anywhere and they’re going to be able to get the applicant pools that they need.”
Here are six major considerations leaders should consider when relocating their firm’s offices.
1. Lead with labor.
Rather than a company defaulting to how they’ve always chosen a location, it’s best to think about various factors of the labor market in the areas under consideration, said Rob Marsh, executive vice president of the labor analytics team at CBRE Group. The four biggest factors are quality of skills the company is trying to attract, cost of those skills, supply of the workforce with those skills and demand or competition for them. It’s important to look at all of these, Marsh said, because if a business leader is only considering the supply and quality, but they ignore competition, that could lead to huge talent challenges.
The ability to meet with talent is also important for recruiting needs, said Ron Loch, agency principal and managing director for Chicago at G&S Business Communications, a global public relations and marketing firm headquartered in New York City. In 2011, the company moved its greater Chicago-area offices from the northwest suburbs to the city. While in the suburbs, business leaders would have to take out significant parts of their day just to travel through poor traffic to attend professional development and networking events held in the city. “We felt like the importance of recruiting combined with just easier access to professional development and innovative discussions, moving to the city probably was in our best interests,” Loch said. Since the move, the company says it’s seen an increase in résumés and interests from highly qualified individuals, he added.
2. Consider culture.
Cities are rich in availability of museums and art, which tends to attract more creative talent — an asset for companies in creative fields. When G&S Business Communications moved, the company had greater access to this talent and the amenities they enjoy. “Culturally, and it’s not a hard cost and hard to put value on, but just the innovative, creative culture that you can create in an urban environment has tremendous value, as well,” Loch said.
In other industries, company culture still matters when choosing between an urban or more remote location, said Sara Rocha, relocation manager for Runzheimer International Ltd., a mobile workforce management solutions company in Waterford, Wisconsin. And to learn about the culture, business leaders must gather feedback from employees. “The only way you get anywhere when it comes to learning about your company culture is by talking to your employees,” Rocha said.
3. Explore relocation interest and packages.
If the company is considering offering relocation packages to employees, first gauge the interest of existing talent, Rocha said. If those applying for relocation tend to be of older generations, then business leaders should reconsider the move because it’s younger generations that will dictate the company’s trajectory, she said.
Also, be flexible in what the relocation packages include. Rocha said that traditional packages involve the company helping in the sale of the employee’s house, but millennials are a generation of renters who would be more enticed to move if offered a lump sum of money to cover moving costs.
4. Examine trends around the employee lifecycle.
“The focus on the millennials and the talent base that comes with that sometimes gets a little overblown in some company’s minds,” CBRE’s Seeley said. “There’s an entire lifecycle of workforce that people need to be thinking about as they’re being strategic about where they locate. Just focusing on one group, one generation, I think can be misguided.” Although younger generations tend to move to major cities, they might migrate to the suburbs if they chose to start families later on. Seeley advised leaders to think more holistically about all generations in the talent pool.
5. Convenience is a differentiator.
Employees in some competitive sectors have the ability to be picky when choosing employers, Seeley said. And for some, their choice isn’t only about the amount on their paycheck; it’s more about the company’s environment and location. Amenities available in and around the office building — cafes, gyms, etc. — are part of this consideration.
Convenience of employee commutes was among considerations when G&S Business Communications chose a new office. Especially when the move was new, many employees at the Chicago office lived in the suburbs. Therefore, Loch looked into office locations that were close to major train lines from the suburbs, as well as trains within the city.
6. Project forward.
It’s also important to think ahead, Loch advised. An office that accommodates a company’s employee population might not be the same fit five years down the line, so the building’s ability to accommodate growth is hugely important.
Technology and working styles should also be factors to consider. Availability of flexible spaces can help in the working styles of all employees present, such as those who prefer a desk every day and those who telecommute. “You have to project what is the office of the future that you want or that you think you’ll need, rather than just picking up the office you have and moving it to a new location,” Loch said.
Lauren Dixon is an associate editor for Talent Economy.