America’s Corporate Exodus from Sleepy Suburbs to Bustling Cities

I’ve been saying it for a while now but a recent New York Times article suggests there is a growing trend among American corporations; they are relocating and/or returning to the city. McDonald’s is doing it. And GE. And Motorola and Kraft Heinz. And the list is growing.

The reasons are clear; “…cities are more attractive places to live than they were 30 years ago”. Cities “… provide tax incentives, and young people want to be there”. This trend “… represents the deconstruction and disaggregation of the traditional corporate headquarters…” as the days of centralized corporate offices housing administration, finance departments, IT teams, etc. seem to be disappearing in favor of a more disparate approach. Moreover, these moves are “... changing the nature of their headquarters, staffing them with a few top white-collar employees and a smattering of digital talent, rather than recreating the endless Dilbert-like pods they once built in the ’burbs”.

In some cases you see headquarters operations in major tier-one cities carving out shared services as they take advantage of low cost solutions domestically and globally. Don’t believe what you hear, labor arbitrage is not dead; these corporations are mindful of the scalable talent required to support and sustain these functions.

The desirable amenities associated with the city are abundant; especially for young talent. Walking neighborhoods (no need to own a car), a “built-in” vibrant night life and diverse social options make cities a logical draw for millennial talent (London and New York City are shining examples).

There seems to be very little to dispute; “the elite functions are going downtown.” Enticing tax incentives and demand for up-and-coming talent has helped fuel the recent corporate repopulation of cities (especially out west).

Regardless, it’s important to remember the underlying business catalyst; increasing pressure to cut costs and bolster ROI. I see it firsthand in the field every day but don’t take my word for it; Read the full New York Times online article (titled Why Corporate America Is Leaving the Suburbs for the City) and draw your own conclusions. 

Robert Hess
Executive Managing Director, GCS

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