You can say it’s because of the low unemployment rate, or that it’s just the preference of millennials, but the reality is, companies are now spending a lot more money to relocate their offices in cool places with a lot of amenities so they can compete for better employees.
The unemployment rate is at an all-time low right now. So almost every quality employee that an employer might want is already working right now. In order for a company to grow and increase its productivity, instead of just putting out help-wanted ads, they are having to actively go out and woo workers away from places they may be blissfully happy in. From what I’m reading about, it’s almost like what some college football programs are doing to woo in new recruits.
I got to coach at the UGA summer football camp and got a first-hand tour of the facilities. The amount of money they put into their locker rooms and the practice facilities is staggering and impressive. But they know they have to look better than the other programs. It’s not much different in the corporate world right now.
Some couple that competitiveness with the fact that a majority of the workforce will soon be millennials, whom some say are willing to sacrifice salary for a good work environment. If that is true, then employers could get away with spending less on employees and more on office amenities. And with the numbers here in Atlanta showing that salaries have not risen near as fast as cost of living, but spending on new offices and relocations has risen significantly, it sounds like that’s exactly what is happening.
A story in the Atlanta Business Chronicle this week talked about how some of the largest real estate deals this year exemplified this trend. Chick-fil-A announced in October that it would move 250 jobs into a new $200 million office tower next to the Atlanta Beltline. Google announced plans to pay a premium to anchor a “fancy, highly amenitized project” on West Peachtree that will be a mixed-use development and will include a hotel, condos and a sky deck.
Norfolk Southern is moving workers from its longtime Midtown regional office into the new $575 million headquarters at Tech Square, one of the nation’s top innovation districts, according to the Chronicle.
“Tenants of all descriptions — law firms, tech firms, service firms — are locating in areas where they can feel that hip vibe and experience energetic surrounding,” said John Robbins in the Chronicle article. He is a senior managing director at Granite Atlanta, a real estate company involved in large commercial intown projects.
Other movements around Atlanta include Microsoft moving its regional headquarters from a cozy spot in Sanctuary Park in Alpharetta, to one of the towers in Avalon where they will pay rents comparable to those paid in Midtown Atlanta. The message is clear, if your community wants to attract office uses, you have to make that community cool and give it a true sense of place.
One thing I found interesting about this article is that it was right next to an article the Chronicle wrote regarding the Atlanta Regional Commission’s attempt to help solve the affordable housing problem in Atlanta. For a long, long time, one of Atlanta’s biggest selling points to companies considering a move here was our relatively low cost of living. If you are a company headquartered in California, you have to pay your employees significantly more than if you are located in Atlanta because real estate and the cost of living is grossly more expensive there. While companies can still pay their employees significantly less here, those employees are needing more and more. An ARC study showed that in 2017, 31 percent of the region’s households were “house-burdened,” meaning they were spending more than 30 percent of their incomes on housing. That is higher than Washington, D.C. and only slightly lower than in Boston and San Francisco.
Geoff Smith is a mortgage banker with Assurance Financial focusing on residential home loans for refinances and home purchases.
*The views and opinions expressed in this column do not necessarily reflect the views of Assurance Financial Group