It might seem obvious, but a new Cushman & Wakefield report found that the best way office developers and owners can help their clients is to offer them product at a low occupancy cost that attracts the best possible employees.
Titled “Human Capital: The War For Talent and It’s Effect on Real Estate,” the study, in part, shows the best markets for occupiers when weighing average rent costs versus the labor talent in the area.
Labor talent was determined by an “innovation index” put together by the U.S. Commerce Department’s Economic Development Administration, the Purdue Center for Regional Development, and other entities. (You can find more information about the Innovation Index than you’ll ever need here.) The index rates metro areas based on their amount of high-tech employment, the education of a population, GDP per worker and other factors.
Cushman compared the innovation of major metro areas with average rents. Obviously, for a tenant, the most attractive places to do business are going to be those that have the lowest rents with the best workforce. Not surprisingly, the Silicon Valley scored highest on the innovation level. Meanwhile, rents are relatively cheap there, at $36.75, according to Cushman, but the area is well known for space constraints.
The report lists some of the most attractive rent-versus-innovation areas as: Austin, Texas; Seattle; Raleigh/Durham; San Diego, the Northern Virginia and Maryland suburbs of Washington, D.C.; and Manchester, N.H.
Of course, just simply building (or in the case of today’s commercial real estate market repurposing) an asset and putting it on the market is not enough to attract today’s worker. Boomers and Millennials alike want workspaces close to public transportation with a live-work-play environment. This, in part, makes Downtown Los Angeles’ office market increasingly attractive.
Additionally, GRS Group’s own Jeff Coyne recently spoke with us and talked about tenants requesting new amenities. Catering to these changing needs, such as giving employees mobile offices within a space, CBRE is serving tenants with what it calls “free addressing.”
It seems like office operators face some pretty big challenges right now…are they up to it?