For as long as anyone can remember, real estate’s mantra has been “location, location, location”. But demand for specialist skillsets is prompting businesses to change their tune.
Nowadays, when it comes to companies looking for a new location to call home for their headquarters or satellite offices, the local talent pool should be the top consideration for most businesses, along with available real estate and the presence of clusters—physical hubs housing a large concentration of same-sector businesses and support services.
The trend is particularly pertinent for sectors such as IT, which has a scarcity of talent. “Employers are getting increasingly creative in trying to attract and retain the best people,” says Tom Duncan, JLL’s Associate Director of UK Research. Remuneration packages are becoming ever-more attractive, with perks such as flexible working, health and fitness packages or shares in the company.
Yet all the perks in the world can’t make up for long commutes to out-of-the-way locations which offer few nearby amenities or good transport links.
Similar companies stick together
Instead, many businesses choose to locate near to existing companies working in a similar field, which gives them the opportunity to tap into a ready-made talent pool and supporting ecosystem.
Yet choosing the right moment to enter established markets is a balancing act. “We find our clients want other risk-taking companies to explore the market,” says Weeink. But there are risks to waiting, too. “If you’re one of the last, other companies have already built a brand, hired the top talent, and become the employer of choice.” To compete takes a bold move, such as increasing the average salary.
“Wherever a company locates, there’s always a trade-off,” explains Duncan. “You have to balance a number of factors. A cluster with a strong talent pool may be attractive, but low vacancy means rents are often much higher. London’s Shoreditch is a prime example.”
City center working
As more people choose to live in urban cores and factors such as walkability and flexibility emerge as primary concerns for the millennial workforce, city center locations increasingly make sense for businesses. “Interestingly, it’s not all about being pushed out of expensive locations,” says Weeink. “We’re seeing companies consolidating operations in London.” Google’s new HQ at King’s Cross and Apple’s office in the renovated Battersea Power Station are cases in point. They use their location and workplace strategy as a testament to their growth plans which appeals to young urban workforce as well as international top talent.
The revitalization of urban centres is feeding into urban infrastructure decisions. “In general, cities are focusing much more on promoting public transport and walking,” says Duncan. “We’re also seeing more investment in transport, cycle paths and pedestrianized areas. Inner cities are becoming easier places both to get to and get around.” Such improvements help to attract yet more workers and businesses to downtown areas.
At the same time, according to Duncan, the average office floorspace provided per work is decreasing as companies embrace new ways of working to drive efficiencies. “Flexible offices let people choose where they want to work, be it a quiet room or a more lively breakout area,” he says. Moreover, tech-driven trends such as telecommuting and hot-desking help make spatial downsizing feasible.
As the boundaries between what constitutes work and home life continue to dissolve, creating user-focused environments is a key factor in attracting talent and improving employee well-being.
Yet some companies have been slow to recognise what today’s employees want from the buildings they work in.
“Many companies are only just waking up to the importance of location planning and the use of real estate to attract talent,” says Duncan. “As the workplace evolves to integrate smart technology, data will help push the debate forward and provide tangible evidence of the advantages of a user focused workplace.”
Cities looking to draw in forward-looking companies will also need to make sure they have the skilled workforce required. As Weeink concludes: “Locations with an education system that best matches the corporate requirements will be the winners in the next 10 to 20 years.”