Just as owners of shopping malls are experiencing a shift in how consumers make purchases, owners of office complexes are seeing a new trend in what employees want. Because young professionals prefer to work in walkable areas, the best talent gravitate to downtown businesses. Primarily for that reason, many office parks are abandoning suburban locations for big city presence.
For instance, in 1973 a building in New Jersey was constructed to serve as the headquarters of Pearson, an educational publishing company. However, because the design of the building has not aged well, the owner wants the structure demolished and replaced with a development for mixed-use consisting of apartments, restaurants, retail stores, and a few business offices.
As US corporations continue to shift, other clashes have flared up. In the last half of the 20th century, companies began moving businesses to suburban areas to accommodate workers, but now many are reverting back to major cities. In fact, as mergers with foreign companies occur, some large corporations are leaving the US entirely.
The bottom line is that a significant number of companies are looking for city presence instead of maintaining suburban locations. Just last year, ConAgra Foods, Inc. confirmed that it too will move to downtown Chicago from its current campus in Nebraska, and Weyerhaeuser Co is leaving its south Seattle location for downtown. Another example is General Electric, which has plans to move to Boston from Connecticut.
Transforming Suburban Buildings
While it seems logical to transform old buildings on the outskirt of downtown into mixed-use developments, neighbors object. Apparently, many suburban neighbors are opposed to the idea of replacing as many as 2,000 employees for several hundred apartments. If the development were less dense, apartments would be supported by residents, but current plans do not satisfy that request.
The challenge is what to do with the increasing number of corporate campuses being vacated and left behind throughout the United States. While some city officials have considered using the buildings as educational institutions, gyms, and community centers, the real problem comes down to finding large tenants.
For the landlord of the Pearson building, Mack-Cali Realty Corp, a 470,000-square-foot building sits empty with no viable prospects in sight. Earlier, this very site brought in annual revenue of more than $8.5 billion. However, once the market was tested, Mack-Cali Realty Corp discovered there was no demand for an aging building outside of the big city.
Today, companies want a great place to recruit, but also want to retain superior employees, which is not always possible in suburban areas. As a result, companies with large, isolated buildings face real issues. People are not opposed to mix-use developments, but they want something that will actually add value.
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