A great urban migration is underway, as more Millennials and employers set up shop in central business districts (CBDs) across the United States.
However, people are moving to cities faster than jobs, according to JLL’s Ambitious Thinking: Smart Cities, Part 1 report. As a result, an increasing number of Americans are reverse commuting from urban areas to the suburbs for work every day.
The latest U.S. Census Bureau data shows that more than 4.8 million people reverse commute out of major cities in the 25 largest Metropolitan Statistical Areas, up 11.6 percent from 2011 levels, according to the JLL report.
Some cities have more reverse-commuters than others. In Denver, the number of people that ride to the suburbs for work increased by 25 percent from 2010 to 2015, when roughly 53 percent of city dwellers commuted to the burbs. Workers in Phoenix, Miami and San Jose saw similar increases in the number of residents with out-of-city commutes during the same time period.
A new era of living and working
This paradox is a new phenomenon, considering that historically, a good job was the “carrot.” People would follow the work, moving to the locations that afforded them the best opportunities—not the other way around. Senior executives tended to choose cushy suburban locations that best suited their own needs and preferences, more than those of the new recruits.
All that is changing as younger generations choose to stay in city apartments longer than previous generations. “Millennials graduated into uncertain economic times. After seeing their parents struggle to stay in their family homes during the recession, many wanted to rent in cities rather than buy in the suburbs,” says Lauren Gilchrist, Senior Director of Research in JLL’s Philadelphia office.
“This generation also loves the authentic live-work-play experience that a city can offer. By ramping up ‘the work’ bit of the equation with more offices in city centers, employers could really win with this age group.”
It’s far from being the only one. A comparison of office vacancy rates in urban versus suburban areas paints a picture of thriving downtowns. Average vacancy rates in CBD Class A buildings were 11.9 percent in the first quarter of 2018, according to JLL research—significantly lower than vacancies in suburban Class A buildings, which sat at 16.5 percent during the same period.
Attracting the best workers
As more people move into cities, suburban office developers are getting creative to stop companies following suit. Many are offering amenities like grocery stores, gourmet restaurants and putting greens.
Indeed, the focus on creating engaging workplaces has never been more important as competition for top talent remains intense.
With historically low unemployment (hitting 2 percent for people with a four-year college degree in May 2018), and a skilled labor shortage that is getting worse before it gets better, high-caliber candidates are in a strong position. And while many are swayed by innovative workplace design and a collaborative culture, location also has a big role to play.
“By offering attractive workplaces in the communities where prized talent wants to live and work, companies can step up recruitment and retention without simply having to rely on wage raises,” Gilchrist says.
While more companies are moving to where the skilled professionals are living and offering top-class amenities within the city center, those with offices outside of the city are increasingly providing sustainable commuting perks as part of benefits packages, such as transit vouchers and free buses to shuttle workers from door to door, complete with WiFi and good coffee.
Workers are winning either way, whether they’re getting a shorter commute or a better commuting experience.