Where to locate your businessThought Leadership for www.smartceo.com on Office Space presented by JLL

Jonathan D. Manekin, MSREJon.Manekin@colliers.comOffice: 443-388-5785

Robert A. Manekin, SIORRobert.Manekin@colliers.comOffice: 443-297-9030

It is often stated (and somewhat worn) that real estate is driven by 3 factors – location, location, and location. And if you asked real estate and site selection professionals, the persons traditionally selecting the location for office space were corporate CEOs, who typically focused on where they lived as opposed to where their work force lived. This is no longer the case. Today, as attracting and retaining talent has become a major driver in deciding location, CEOs are making decisions based on where their work force wants to be.

And guess what? According to research done by the Urban Land Institute (the real estate industry’s think tank), the millennial generation wants to work in cities, not suburbs.

So when thinking about locating in that idyllic office park in Hunt Valley, White Marsh, or Linthicum (all established areas with solid office product and decent amenities), you would best consider a few of the reasons fueling the resurgence of cities as a place to live, work and play:

1. The work force for the next 10+ years will be increasingly dominated by millennials, those people born after 1982. This group has racked up significant debt getting through college and graduate/professional schools. They want to rent housing, in part because they cannot afford to own it. They want to “travel light” without incurring more debt. So there will be no house in the suburbs for them quite yet.

2. While millennials want to defer housing purchases, and mortgage debt, the baby boomer generation has a different perspective – it’s called downsizing. Those folks –many of whom are friends, clients or both - find themselves lured to the excitement of Harbor East, Fells Point, Canton, and Locust Point. No more cutting the grass and driving everywhere to get anything.

3. The costs associated with buying and servicing a car has also run headlong into student debt. That is why Zipcar has become an important part of the millennial lifestyle, as has Uber (where it is legal). Notice the increased discussions concerning installing bike lanes? That is more than a “healthy lifestyle” issue. Riding a bike to work is cost effective. Developers of apartment projects know this, as they have had to create areas for tenant bike storage, something unheard of 10-15 years ago.

4. The housing this generation wants is tied to the concept of a “24 hour” location, which for many cities such as Baltimore is more like an “18 hour” location, but that still works. Easy access to shops, restaurants, bars, and entertainment venues (walking as opposed to driving) is key and cheap. Think Federal Hill, Canton and Fells Point.

5. Office parks are encountering new challenges never before contemplated. When the Washington Post style section runs a front page article entitled “The old suburban office park is the new American ghost town,” you know that this is now an issue. Even without focusing on millennials, changing work styles, greater mobility, crowded beltways, and increasing commute times have combined to challenge the wisdom of suburban business locations and generate a rethinking of downtown areas as places to “live, work and play.”

Two examples of this phenomenon in downtown Baltimore are Pandora and Maryland Auto Insurance (previously the Maryland Automobile Insurance Fund or MAIF). Pandora was located in Gateway Business Park in Columbia, proximate to the intersection of I-95 and md Rte. 175. Maryland Auto owned its headquarters in Annapolis. Both organizations selected locations in Baltimore City.

Pandora chose 250 West Pratt, one of the most striking Class A office buildings in the downtown. This location, with Pandora’s name high atop the building, is now the American headquarters for the rapidly growing jewelry firm headquartered in the Netherlands. Maryland Auto selected McHenry Row, an adaptive reuse in Locust Point featuring live (lots of apartments, more on the way), work (office space) and play (retailing with everything from banks to Worlds of Beer, with a Harris Teeter thrown in the mix).

Neither of these two companies had prior locations in Baltimore City. Yet both wanted to be in Baltimore City for several reasons, one of the most significant being to attract and retain a new generation of workers.

So when you, your investors, and/or your management team ask “where do we want to locate our company,’ think about the resurgence of downtown areas throughout the country; think about the growth of apartments, condominiums and areas such as Harbor East, Fells Point, Canton and Brewers Hill, Locust Point, and Federal Hill (aka South Baltimore). That’s where the millennials are. That’s where business will need to be.

http://www.jll.com/baltimore