The 3 R's of CRE - Part 3: Relocate

Potentially the most radical of the 3 R's, the option to relocate is also the most powerful one. Done right, a relocation can lower your rent, make your employees happier and more productive, lower your operating costs, and potentially generate additional income or savings for your company. While moving your office is never a decision to be taken lightly, the benefits can be huge -- even if you're just moving across the street as opposed to across the country.

As your company thinks about relocating, remember that a relocation impacts two different audiences:

Your employees, who face both economic and lifestyle concerns related to your office's location.
Your company, who can enjoy both economic and regulatory benefits from relocation, in addition to receiving the positive implications of any benefits provided to your employees.

It's important to weigh stay-or-go decisions with both camps in mind, since the impact of a relocation on either group either one could generate enough benefit to make moving the best choice.

Regional and National Relocation

If the 1970s and 1980s were the decades of office suburbanification, the 2010s and 2020s appear to be the decades of southward and outward movement for office users. Locations in traditional global gateway cities like New York, Chicago, San Francisco and Los Angeles are turning into headquarters in Denver, Austin, Charlotte and Fort Lauderdale. While reasons like weather and taxes are important parts of the reasons that companies move, they are far from the only ones.

US Cost of Living C2ER 21Q4

Cost of Living Map, where the national average is 100.

Here are reasons that you may want to consider a big move:

Lifestyle. Many alternative markets provide significant lifestyle benefits over "traditional" office cities. These can include shorter commute times, closer access to outdoor and recreational opportunities, better housing options, and a different community feel and vibe.
Cost of living. Most global gateway cities like New York, Los Angeles, Boston and San Francisco have extremely high costs of living. While housing and taxes are the most commonly considered cost issues, they aren't the only ones. Fuel, energy, food, services and recreation are all highly variable in cost with many up-and-coming and secondary markets offering significant savings.
Cost of operation. Markets with lower costs of living also usually have lower costs to operate your business. If your workers are paying less for their apartments and houses, you're probably also going to spend less on taxes. Lower cost metropolitan areas also frequently have lower salary levels, as well. You're going to pay less in Orange County, Florida than you will in Orange County, California because your workers get to pay less, too.
Taxes & regulations. Many markets have favorable tax and regulatory environments for businesses, too. Whether you are looking for lower taxes, a more business-friendly legal climate, or employer-friendly labor policies, southward and outward moves can make this happen.
Convenience and access. 40 years ago, the only way to get access to a wide range international flights was to be in New York. If you wanted programmers, you had to be in the San Francisco Bay Area. Now, America's largest international gateways include Atlanta and Dallas. And you can get an app built just about anywhere. Add in a workforce that can work from anywhere, and you can get the talent and mobility you need in just about any market in America.

Local Relocation and Reconfiguration

On the other hand, moving and reconfiguring within your community makes a great deal of sense if you are already located in an area with the right workforce and an acceptable tax and business climate. Of course, it's also the only option if your company primarily serves a local clientele.

If your office needs reconfiguration, it's an excellent time to reconsider your location. Perhaps you can move to a better part of the community for taxes and regulation. You might also be able find an even more desirable space with lower rents and operating costs. Regardless of all of those factors, you might also want to move simply to provide a more convenient or desirable location for your existing workforce or for easier recruiting.

Satellites -- The Best of All Worlds

Many companies are opting for the "all of the above" solution by reducing the size of their offices, but adding additional satellite locations. Instead of having everyone commute to Manhattan, they shrink their Midtown office and put satellites in Long Island, Westchester, and New Jersey, letting those who need to be in an office do it with less expense and inconvenience. Others do it on a grander scale. For example, Goldman Sachs' fourth largest office isn't in London, Shanghai or Dubai as of this writing. It's in Salt Lake City.

Economic Incentives -- Get Paid to Move!

Finally, if relocating works for your company, many local jurisdictions are willing to bend over backwards to convince you to choose their community over others. The amount of economic benefits you can receive varies greatly from place to place. They can also vary based on the size of your space and the number of jobs contained therein. However, common incentives include:

Property tax rebates and discounts
Job training credits
Job creation credits
Favorable (low or no interest) financing for construction and other expenses.

Economic incentives don't only come into play when moving long distances, either. They could become available to your business when you simply cross a city, county, or state line, even though you are staying in the same metropolitan area.

Ultimately, relocation is one of many tools that your business has to reconfigure its office space and maximize ROI.