In this month’s Expert Insight into Tenant Representation feature, Finance Monthly explores US headquarters relocation trends, speaking to Steve Stratton, International Director and Chairman of JLL’s Headquarters Practice Group.
What are the top considerations when companies are moving headquarters locations?
Moving headquarters occurs as a result of a merger or an acquisition, a new operational approach or a need for a new work environment to complement incoming talent. Crucial in the process of changing or renovating a company’s headquarters is having strong leadership to ensure the changes maintain alignment with the company’s vision while ensuring the workforce continues to perform at high levels. What is intriguing about the process is that while each organization has a unique story, change or transformation, labor and productivity are always key considerations when companies look for a new headquarters location.
What factors are impacting where companies locate and how has this changed over the last decade?
Mergers and acquisitions, in cases when the company will have to centralize headquarters locations, and labor play major roles in where companies locate. Workforce demographics significantly impact a company’s decision on where to locate and the space needed to create a thriving culture. The C-suite must build a workplace that meets the needs of all generations in its workforce.
What are the most common hurdles when looking for a headquarters?
The C-suite has to drive consensus. Leadership needs to manage the change so employees, clients and prospects have a clear understanding of the company’s vision. Human capital is any company’s most important asset, and any physical changes to the office can only be successfully completed in strong partnership with human resources. The key is creating a holistic transition and implementation strategy, leaving employees more comfortable and efficient at the end of the day. JLL is developing productivity measures to help companies measure critical people performance metrics prior to a move. Improving and investing in employee performance substantially outweighs potential savings on real estate.
Are you seeing any geographical trends in where companies want to locate – particular states or cities versus suburbs for example?
I think cities such as Dallas, Atlanta and Denver are some of the most pro-business markets in the US because they are quite employee-friendly and culturally diverse. New York City, Chicago, Boston and San Francisco have seen strong play in the headquarters world as well. Most activity in these cities is centralized in the urban core where certain companies are seeking access to a younger workforce. Having a centrally located headquarters allows employees to achieve a live-work-play environment where they are close to work, close to home and close to entertainment and retail. That live-work-play notion has become very popular in these emerging downtown markets. In Chicago, we have 20 cranes of residential towers being constructed in the downtown area, and activity levels also remain high in Boston and San Francisco.
What type of headquarters real estate and workplace trends are your clients demanding?
We have witnessed a move toward adaptive reuse of older, loft-style buildings. In these buildings, as soon as you walk into the lobby, you’re introduced to a contemporary, cool vibe that appeals to the younger generation. The modernity of these headquarters buildings is enhanced by the use of innovative technology. Companies are also trying to include as much outdoor space as possible. According to a number of green buildings studies supported by Harvard, more light and fresh air are workplace enhancers and lead to notable gains in employee wellness and productivity.
Another trend that we’ve seen is the demand for more private space, such as two-person or four-person meeting spaces rather than big conference rooms. I believe smaller conference rooms will gain popularity in the near future, since they provide employees with the ability to focus, make confidential calls or collaborate with one another.
How are data and analytics/technology tools changing the way companies choose their headquarters?
Leveraging technology adds clarity and rich data to a company’s decision-making process when choosing a new headquarters. It provides insight into labor trends, competitive locations and neighboring universities that can help build the firm’s labor pool. When choosing a headquarters, companies can preview and investigate potential new locations through Google Earth. This makes it easier to anticipate the look and the feel of the building when looking for a place that is outside your current area.
Has technology and the mobile workforce changed the type of headquarters companies are looking for?
At least 10 percent of a company’s workforce is within a mobile work environment, allowing growth through flexibility. While the mobility trend will continue to gain momentum, companies need to closely consider the impacts on a unified, consistent culture.
This article was originally published in the July edition of Finance Monthly Magazine. To view the publication, please visit: http://www.finance-monthly.com/magazines/FM0716/#