Office properties in central business districts (CBD) are outperforming those in typical single-use suburban office areas, according to recent trends examined by the NAIOP Research Foundation. Well-designed mixed use infill projects near central business districts are attracting companies and young educated workers. Bakery Square near downtown Pittsburgh is an example of a successful mixed use redevelopment on six acres of a former Nabisco factory. Tenants of Bakery Square include Google, university medical staff, upscale retailers, and a hotel with a parking garage. The historic property is in affluent part of town, with a high density population and accessibility to surrounding areas.
The trend to develop single-use auto-oriented office parks is diminishing, while “live work and play” office properties are being revived just outside large metro areas in the suburbs, where the majority of the nation’s office space is located. Single-use areas formerly developed for retail or office parks are being redeveloped as “live work and play” districts. Villa Italia regional mall, a 22 block, 140 acre downtown area in Lakewood, a suburb just outside Denver, Colorado, has been redeveloped as Belmar. Belmar is a mixed-use amenity commercial, residential and community oriented space, conveniently located near public transportation. Ballston, a compact mixed-use neighborhood on the Metrorail line in Arlington, Virginia just outside Washington DC, is another successful example of a diverse combination of commercial, residential and public uses that enables tenants to conveniently “live work and play.”
The researchers surveyed 128 real estate brokers leasing office space across the country, who were associated with major brokerage firms. The researchers also analyzed data from the CoStar office property database to gauge office performance. The researchers found that in general large companies serving outside markets prefer suburban locations close to highways, airports, railways or waterways. Companies that provide local service such as legal, accounting, architecture and engineering, financial, insurance, real estate and other professional and consulting services tend to favor downtown locations. The researchers found however, that there is an upward trend by these tenants to also look at the office space in central business districts located just outside downtown areas. Overall those surveyed said their tenants would actively seek to locate in mixed-use ‘live work play” office district over a single-use suburban office setting.
Source: NAIOP Research Foundation, “Preferred Office Locations,” by Emil Malizia, October 2014
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