Why Companies Are Paying Big Money To Have An Office In These Six Cities
It costs a fortune to rent office space in one of these 6 cities. Are they advantages really worth the money?
“Watch out!” landlords of commercial office spaces have been warned, “The millennials with all their remote working, co-working, and gig economy ideas will kill your business.” Well, perhaps at some point. But based on a new Bisnow report, the millennials, Generation X-ers, baby-boomers and just about anyone else who needs a job are showing up for work in some of the world’s most bustling cities. Their employees, meanwhile, are paying a premium for office space to stay in the mix with the business community around them.
According to the report, which reflects the last quarter of 2016, businesses are shelling out upwards of $130 per square foot annually to keep a competitive edge in six of the world’s most dynamic cities. Using its Premium Office Rent Tracker to compare top office costs, JLL found these six international markets drained corporate rent coffers the fastest.
Rent: $302 per square foot, vacancy rate (grade-A space): 1.5 percent
London (West End)
Rent: $197 per square foot, vacancy rate (all space): 4 percent
Rent: $194 per square foot, vacancy rate (all space): 8.7 percent
Rent: $179 per square foot, vacancy rate (grade-A space): 1.4 percent
Rent: $153 per square foot, vacancy rate (grade-A space): 1.9 percent
Rent: $135 per square foot, vacancy rate (grade-A space): 6.5 percent
The table above, though, doesn’t mean that all major companies are eschewing the work from home philosophy, touted so heavily in recent years. Working from home saves office space and, thus, saves money. However, just don’t expect to Google Hang Out the CEO or upper management and see them on their couch in their PJ’s with a bowl of chips and Premier League soccer playing in the background. General rule of thumb—the higher up the corporate ladder you go, the more you are expected to show up to work in an office, not on a laptop. It doesn’t mean that you can’t secure a decent job by working remotely. These 23 Fortune 500 companies, probably, pay top dollar for office space in one of the six primo markets named above—but they are also a friend to remote workers.
Unless a start-up company has a surplus of cash they need to burn through to justify their place in the world, it’s doubtful they will be paying $302 per square foot to be in a glossy Hong Kong office tower. Remote working has proven highly effective in getting smaller companies off the ground while keeping costs down. These 39 companies show that success isn’t always predicated on being in the mix in one of the world’s most expensive cities. Sometime an internet connection is all you need.
One of the biggest arguments against working from home is that it’s hard to build a collaborative team spirit. That only comes from in-person contact, bouncing ideas off one other and occasionally a joke or two. It’s why former Yahoo! CEO Marissa Mayer ordered her remote workers back to the company HQ in 2013 when she took over. Showing up for work helps if work is a fun place to go. That means being around inspiring, interesting people.
Although it’s hard to interview a prospective employee based on their fun and interesting quotient, established corporations like G.E., Merck and homebuilder Lennar are realizing that attracting top, younger talent means competing with hipper youth driven companies. Many of them are now embracing the the concept of “if you can’t beat ‘em, join ‘em” and are renting space from co-working companies like WeWork, allowing employees to be in a more liberating environment than they would have otherwise been in. If those spaces happen to be some of the most vibrant, inspiring cities in the world, then all the money they are paying to be there might just be worth it.
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