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• From 2010 to 2015 approximately 2.5 million sq. ft. was absorbed in the CBD, reflecting
43 relocations from the suburbs.
• The West Loop gained 46% of the total space taken by tenants who relocated to the CBD
from the suburbs, with River North absorbing 31% in the time frame. Meanwhile, 45% of
the companies that relocated to the CBD vacated the North Suburban submarket.
• Even though downtown is the heart of the metro area’s economic activity, the suburbs
have a much larger employment footprint. The suburban workforce is about 3 million,
nearly four times that of the city.
• According to CBRE Research, talent trumps cost for occupiers. A survey of 229 corporate
real estate executives showed that 57% of the respondents see employee attraction and
retention driving workplace strategy, while 44% see cost escalation as a leading challenge.
• The cost of real estate is much higher in the CBD than in the suburban market—68%
higher in average asking gross rent.
• Relocating to the CBD from the suburbs is typically associated with a desire for
densification, better recruitment and retention, trophy office space and access to a larger
labor supply.
• Staying in the suburbs is associated with a focus on lower real estate costs, cheaper and
more experienced labor, and office requirements related to research campuses or lab
space.
Numerous companies are relocat ing their headquarters to downtown Chicago. Whi le
the decis ion is viable for some, i t doesn’t make sense for al l f i rms. Here we explore
the current t rend and the main drivers for the business decis ion to move or s tay put .
You can always
go…downtown but does
it always make sense?
The urban migration paradigm
April 2016 CBRE Research © 2016 CBRE, Inc. | 1
Matthew WalaszekSenior Research Analyst, Office
CHICAGO OFFICE
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April 2016 CBRE Research © 2016 CBRE, Inc. | 2
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Figure 1: Relocations to the CBD from the Suburbs 2010 2015 and % of Suburban Transaction Volume 10K SF+
2%3%
16%
5%
1%
10%
0%
5%
10%
15%
20%
0
200
400
600
800
1,000
1,200
1,400
2010 2011 2012 2013 2014 2015
Sq. F
t. (0
00s)
Suburban to CBD Relocation Volume % of Suburban Transaction Volume
Average CBD relocations out of total transaction volume in suburbs (6%)
Source: CBRE Research, Q4 2015.
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1Calculations by TICAS on data from U.S. Department of Labor, Bureau of Labor Statistics (BLS). 3
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River North48%
East Loop20%
Central Loop16%
West Loop14%
N Michigan Ave2%
North Suburban45.1%
Northwest Suburbs24.7%
E/W Tollway25.9%
O'Hare3.0%
South Suburbs1.2%
Source: CBRE Research, Q4 2015.
Figure 3: Breakdown of Transaction Volume (Sq. Ft.) by Submarket Vacated 2010 2015
© 2016 CBRE, Inc. |
Figure 2: Breakdown of Transaction Volume (Sq. Ft.) by Submarket, Suburban to CBD Relocations 2010 2015
West Loop45.9%
River North31.3%
East Loop11.8%
Central Loop10.2%
NMA0.8%
Source: CBRE Research, Q4 2015.
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April 2016 CBRE Research © 2016 CBRE, Inc. | 4
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Category Millennials (%) Gen Xers (%) Baby Boomers (%)
Walkability 54 45 49
Space between neighbors 50 57 57
Shopping and entertainment 44 36 43
Convenient public transit 39 25 29
Figure 4: Generation Comparison—Preferences
Percentage of respondents indicating "top" or "high" priority, analyzed by major group.Source: America in 2015: A ULI Survey of Views on Housing, Transportation, and Community, Q2 2015.
Figure 5: Labor Pool Breakdown—West Loop vs. Suburban Markets
0
1
2
3
4
5
6
West Loop Oak Brook O'Hare Lake Cook Schaumburg
Mill
ions
Total Population Population 18 To 34 Population 35 To 54 HH Earning $75K & Up Prof/Sci/Tech/Admin*
*Residents working in Professional/Science/Technology/Admin/Information-related industries Source: CBRE, Q4 2015.
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April 2016 CBRE Research © 2016 CBRE, Inc. | 5
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0
1
2
3
4
City Population Suburban Population
Mill
ions
Age 25 - 34 Age 35 - 44 Age 45 - 54 Age 55 - 64
13%
14%
13%
12%
11%
12%
15%
19%
Figure 6: City vs. Suburban Population Breakdown by Age (With % of the Total Population)
Source: Nielsen, Q4 2015.
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April 2016 CBRE Research © 2016 CBRE, Inc. | 6
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Pharma & Healthcare
31%
Financial Services24%
Telecommunications
16%
Insurance Related15%
Wholesale Trade14%
Suburban Market
Figure 7: Occupier Industry Breakdown—Top 5 by Sq. Ft., Suburbs vs. CBD
Financial Services36%
Legal Services29%
Information & Tech14%
Insurance Related14%
Advertising & Related Services
7%
Source: CBRE Research, Q4 2015.
36.79
21.92
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
CBD Suburban
Asking Rent ($/SF)
Figure 8: Average Asking Gross Rent–CBD vs. Suburban Market
Source: CBRE Research, Q4 2015.
CBDMarket
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April 2016 CBRE Research © 2016 CBRE, Inc. | 7
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April 2016 CBRE Research © 2016 CBRE, Inc. | 8
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Figure 9: Needs-Based Comparison–Relocate to CBD vs. Stay in Suburban Market
Source: CBRE Research, Q4 2015.
Disclaimer: Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
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