Is your company a “downtown” kind of company, or are you more comfortable operating out in the suburbs?
How business executives answer that question is at the heart of the current competition between urban revitalization proponents and those who favor suburban, “greenfield” development.
Most major metropolitan areas have a regional economic development organization whose primary function is to attract businesses to their metro area. The regional organization acts as a front for perhaps a dozen or more smaller organizations throughout the region.
Once the regional organization has piqued the interest of an expanding or relocating company, it passes the “lead” to its member jurisdictions, which then compete to attract the company to their particular city or county. Usually, one of those organizations represents the major city, while the others represent the various suburban cities and counties surrounding the core city.
While you may have to choose from among a dozen or more jurisdictions within a particular metro area, the first decision you need to make is between the central city and everywhere else.
As part of that process, here are a few things you ought to look at, in no particular order:
Real estate costs. Don’t assume that real estate is cheaper in the suburbs.
In most cases, real estate costs in the outlying areas are cheaper, but not always. If vacancy rates are high in the downtown market, the rental costs will invariably be cheaper downtown than in the suburbs.
Room for expansion. While you may find cheaper real estate costs in one place or the other, you also need to make sure there is adequate space to accommodate your future growth plans. This often points to a suburban location, but not always.
Parking. This is usually the Achilles heel of downtown locations, particularly if you plan on having a lot of employees there. Even if you don’t pick up the tab for employee parking, paying high prices for hard-to-find parking is a major source of employee dissatisfaction in many companies.
Zoning restrictions. This is a fact of life no matter where you go. Generally, there is more flexibility in the outlying areas but, if the downtown area is somewhat distressed, you may actually encounter more flexibility in the city.
Financial Incentives. Many, if not most, central cities have some form of inducements, such as Tax Increment Financing (TIF), to lower the cost of locating within distressed parts of the city. Suburban locations also usually offer incentives, too. Don’t forget to factor these into your calculations.
Access to public transportation. This is one area in which urban-based locations have the suburbs beat, hands down. Public transportation in most suburban areas is weak, at best, whereas most metros have decent access to public transportation to and from the downtown area.
Proximity to other businesses. Does your company need to be close to other businesses? If so, downtown is the place to be.
Proximity to work force. Some central cities have lots of people living downtown, others don’t. Know where your potential work force is most likely to come from, and make your decision accordingly. See “long commutes” below.
Long commutes. In most metro areas, the majority of people working downtown live in the suburbs, which accounts for the long traffic backups found in most metros during morning and evening rush hours. You decide what impact, if any, that’ll have on your employees.
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