Based on the most widely accepted age range of the elusive millennial, the oldest of the generation are now in their mid-30’s. These avocado-loving hipsters are leaving behind their studio apartments in cobblestoned downtowns and trading up for something grassier and more family-friendly. With their shift away from city living comes increased popularity in all things suburban, including the office market.
And the millennials aren’t the only ones fueling the shift. Many downtown-based companies are finding that the amenities they thought they could only find downtown are not so exclusive to the cities any longer.
People are car-obsessed
Parking in downtowns can be grueling. Public transportation continues to improve over time for those that live or work downtown, but can’t afford the nearly-$200.00 per month price tag for a luxury such as a space in a downtown garage. But public transit won’t solve all of the problems. Some employees require cars for their in-and-out-of-the-office schedules. Some parents want a vehicle accessible in case of emergencies at their kids’ schools. Whatever the reason, the point remains that people will always need or want parking. And what has plenty of parking? The ‘burbs.
With typical ratios of 5 spaces to every 1,000 square feet of office space, the amenity of free parking for employees is impossible to overlook in terms of both convenience to employees and savings to employers. Jumping on the highway instead of waiting in line to get out of your 4-story parking garages only to cruise at barely-moving, stop-and-go pace as you compete with downtown traffic during the height of the tourism season. Many are finding that the added stress, expense, and time associated with being downtown may not be as necessary as they once thought.
Gyms, breweries, restaurants and more
Amenities that used to be one of the primary lures for downtown office tenants are now sprinkled conveniently throughout the suburbs. Specialty gyms and fitness studios, like Olympia Karate in Westbrook or Foley Fitness in Scarborough, are often just walking distance or a short drive from suburban office tenants. Restaurants like OTTO’s with primary downtown locations are opening second or third locations in the suburbs. Breweries that used to focus on downtown are now spreading like wildfire in the suburbs. Take Industrial Way, for example – with tenants like Allagash Brewing Company, Foundation Brewing, Austin Street Brewery, Definitive Brewing Company, and more – serving as the perfect happy hour location for those commuting from the Riverton neighborhood of the Portland suburbs.
Money, money, money
An obvious benefit of suburban offices is the cost savings. It’s not just the parking that’s expensive downtown. The price per square foot of office space has skyrocketed in today’s market. With a lack of inventory, some landlords are asking – and often getting – as much as $30.00/sf NNN for prime downtown locations. The suburbs are far more wallet-friendly. Class A offices in the suburbs generally range from about $13.00 – $18.00/sf NNN – often with NNN costs lower than their urban counterparts. The bottom line is almost always a top priority, especially non-profits. The savings from occupying a space downtown to the suburbs can be as significant as 15 – 20%, as has been demonstrated by some recent office tenants moving from the heart of downtown Portland to just a few miles off-peninsula on Forest Avenue.
Millennials aren’t the only ones fueling this shift, but rather anyone looking for space, safety, savings, and newfound amenities that come with suburban office occupancy. The downtown markets are still thriving, with vacancy rates among the lowest in decades, so for the tenants that find the value of suburbs; there are plenty of landlords that will be happy to accommodate.
