It might seem weird on face for an apartment and home locating service to write about corporate HQs and talent hubs, but everything is tightly tied together in a big ecosystem in reality. Where jobs are = where people live, especially if commuting returns to play at some point in the next year and a half. By the way, before we get too deep on corporate HQs and talent hubs, let's run some stats on commuting, shall we? Based on results from the Becker-Friedman Institute at the University of Chicago, the total time Americans spend commuting to work has dropped 62.4 million hours per day since COVID began. From mid-March to mid-September, that's over 9 billion hours of total time. That's pretty good for the environment, wouldn't you think? By the way, from that same research, it looks like work-from-home is about 52.3% of pandemic-era employment. Normally that's about 5.4%, so ... that's a huge jump. Previous studies had said 37-51% of people could reliably do their jobs from home, so ... looks like we're operating on the high end.
Now let's turn our attention to an article by Richard Florida in Harvard Business Review. Florida is a noted scholar on talent movements, how cities rise up and fall down, and the like -- in essence, urbanization. His article, which is very long and I wouldn't expect you to read in its entirety, is about the future of corporate HQs. Much ink has already been spilled on this topic, but Florida is an expert in the area, so let's see what we can learn from him.
Two visuals to consider
This first one is about "talent hubs" in the United States:
As you can see, Dallas area isn't necessarily a "superstar city" in terms of percentage growth, but ... this research only looks at Fortune 500 companies. Those are important, but it's not the entire picture of the economy either. We know DFW has seen significant population surge in recent years, and that's largely tied to job availability, cost of living, and more. We also know DFW has gotten a ton of relocations in recent years, often from California companies, with McKesson probably being the biggest example of the past 36 months.
Overall, the DFW area is the third-largest concentration of big-company HQs in America.
Close-in urban neighborhoods
That refers to a neighborhood within three miles of a city center. Well, between 2010 and 2020, young, educated people (college degree or higher) between 25 and 34 accounted for over half the growth in those neighborhoods, US-wide. You could take a lot from that data point. The first, most obvious idea is that younger people (in the aggregate) like living in cities, but maybe not downtown condos. There had been a prevailing theory near the beginning of COVID that younger people would head to the suburbs earlier, for space and price, but that may not be true.
In his article, Florida even looks at some "head-scratching" real estate moves of the past few years. As the pandemic was going on, Facebook got 730,000 square feet of leased real estate in New York City, adjacent to Penn Station. That seemed to make no sense, because everyone and their mother was discussing how in-office work was over and commercial real estate needed to pivot. So why would a big platform tech company grab that much space in such an expensive city? Because they know those urban hubs could eventually be a key to unlocking young talent in a "New Normal" world.
CBRE released a paper recently on "emerging location strategies in the time of COVID," and it essentially says what we're saying here: companies will continue to double down on urban locations, often as a "brand statement," much like a Fifth Avenue or Rodeo Drive store would be. Those will be "hub" offices, and then there will be "spoke" offices which can include people's living rooms, WeWork locations, and more. You may see some California companies move their HQ to DFW, but retain a Bay Area location as a "spoke," just for closer access to investors and other tech people who aren't in Texas.
What does this all mean for you?
Well, every situation is different, so specifically for you it may not mean much -- or it may mean everything. What it overall means is that a lot of people, and companies, will keep coming to DFW, which will have a long-term impact on pricing and desired neighborhoods. We won't see massive changes shake out immediately, though. The good news is, we're building a lot -- possibly overbuilding! -- which means capacity-wise, we should be set up to handle it. But 2021 will be an interesting year as regards the vaccine and how some of the bigger companies start shifting people back to work on different models. Will Plano be an epicenter for much of this? Sure, as will all of DFW. It'll be an interesting ride, and if you can see some of these trends ahead of time, it might put you in a really beneficial situation in terms of renting and buying. We're here to help guide!