When it comes to corporate headquarters, don’t count out big cities and downtowns just yet, says a new post from Bloomberg.
“The early-pandemic view that cities were uniquely vulnerable to Covid-19 has faded in the face of overwhelming evidence that they aren’t,” the article says.
The article cites as an example Rite-Aid Corp, which is opening a new Enterprise Headquarters and Collaboration Center in Philadelphia.
And he cites a number of trends potentially disproving the theory that city-based headquarters are a pandemic relic:
- Covid-19 may have halted that shift to the city, but there are few signs that it has reversed it. One striking statistic: three of the six U.S. office markets with the highest vacancy rates as of the middle of this year were in New York’s suburbs, according to commercial real estate services provider Jones Lang LaSalle Inc., while New York City’s vacancy rate was sixth lowest of the 54 markets JLL tracks.
- In 2018, Patrick Adler of the University of California at Riverside and Richard Florida of the University of Toronto looked at the headquarters of Fortune 500 companies for several years between 1955 and 2017 and concluded that access to talent, airport connections and metropolitan-area size seemed to be the best explanations for why large companies located their headquarters where they did.
- Several high-profile corporations from smaller Midwestern cities — Archer-Daniels-Midland Co., Caterpillar Inc., Conagra Brands Inc. — have established such bases in Chicago in recent years.
“So yes, corporate headquarters may look different, and possibly be smaller, in the post-pandemic era. Demand for office space in general may be lower, too. But HQs of all kinds will probably keep gravitating to big cities.”