COVID-19 has changed a lot, but it isn’t likely to change where corporations locate their HQs.
At least, that’s what famed business expert Richard Florida had to say in a new article for the Harvard Business Review. The crux of his argument: the short-term effects of COVID are unlikely to undo the long-term trend of America’s largest companies keeping their corporate HQs in America’s largest cities.
That doesn’t mean COVID hasn’t had an effect at all, though. Huge numbers of workers are working remotely for the first time in their careers and many are enjoying the added flexibility.
According to Florida, while just 2% of the American workforce worked remotely full-time before COVID, roughly 20% is expected to work remotely full-time after this is all over. Big companies are making big commitments to remote work.
We’re also seeing a greater “escape the city” sentiment than before – families and vulnerable populations want to be in safer, lower-density and less expensive places where affording a house with a home office isn’t an impossible dream.
Expectations are changing and companies need to change with them. That said, you can have your cake and eat it, too. While corporate HQs in large cities aren’t going away, satellite offices focused on talent attraction and retention in mid-sized tech hubs are becoming a major piece of corporate location strategy.
Here are 4 reasons talent magnet tech offices will help your company grow:
Right next door to top tech talent pipelines
There’s an upside to counting a top tech university as one of your neighbours. While talent is mobile, there is no guarantee that top tech talent will move for a job.
A recent study into University of Waterloo graduates – that is, graduates of Canada’s top technology university – found that about 60% stay in Canada. There’s a reason that top tech companies cluster around top tech talent pipelines.
It doesn’t hurt that Canada has some of the world’s best business immigration programs, which means your talent pipeline doesn’t need to be local – it can be global.
Local offices are also able to build stronger relationships with universities themselves, which can help increase brand visibility on campus and access to students.
Give families more life for less money
Families have fled the largest cities in the hopes of finding greater affordability. The idea that every worker wants to be in the downtown core of a major city – or can afford to be in the major core of a downtown city – is flawed.
This is especially true of young families who haven’t entered the real estate market and have little hope of doing so with skyrocketing housing prices. One of the reasons Waterloo is the fastest-growing community in Canada is due to out-flows of people from Toronto.
Opening a satellite office in a midsize community is like turning on a magnet for skilled, experienced tech talent that’s looking to escape the city. It means providing an option for those with families or vulnerable populations that decreases costs while increasing safety and access to recreation, the outdoors and more.
Reduce your real estate overhead
While big cities are still the focus for HQs, it’s impossible to ignore the fact that real estate costs are exorbitant. Office space in New York City is six times as expensive as Waterloo, according to CBRE. The Bay Area is five times as expensive. Los Angeles and Washington are all three times as expensive.
In Canada, big hubs like Toronto and Montreal are twice as expensive as Waterloo.
Opening a hub office in a smaller community provides an opportunity to acquire real estate square footage and add capacity without breaking the bank. If you don’t need everyone to work in the location that costs you the most to lease, why do it? If the talent wants to be there and the cost advantages back it up, opening a talent-focused satellite office is a no-brainer.
Let young workers stay flexible
One note from Florida’s article is that young talent still prefers larger cities. While the living costs are substantial, the lack of dependents and the economics of having roommates make it workable. The nightlife and youth-focused community make it preferable. That isn’t true for every new graduate, but it is for many and that’s just fine.
However, that still doesn’t mean a second or third office needs to be in one of these high-cost locations. Finding a mid-sized city that’s within reasonable commute distance – preferably with mass transit options – can provide young workers the option of living in the city while reporting to a nearby talent magnet office a few days per week.