City areas with a variety of restaurants, cafes, shops, and offices have long been places for companies wanting to attract top talent. But the benefits have taken on new meaning amid efforts to encourage employees to return to the office, according to a JLL analysis.

The Value of Location

"Companies recognize the value of high-quality offices and prime locations, not just for recruitment and retention advantages, but also to motivate return-to-office strategies," says Jacob Rowden, Director of U.S. Office Research at JLL. "And more frequently, these places are appearing in the peripheral regions of the urban core."

Indeed, in the U.S., the main office corridors are migrating from central business districts (CBD), according to JLL research. Peripheral urban neighborhoods are becoming increasingly dominant and now represent 54% of the most expensive streets in the U.S.

The report found that while Sand Hill Road in California and Hudson Yards in New York still hold the highest office rents, interest in mixed-use environments is growing as consumer habits evolve.

Activity levels in areas with a more diverse distribution of property types among commercial, residential, and entertainment uses have recovered faster than commercially dominated cores.

Integrated Development

In Europe, there is a broader effort to offer neighborhoods and entire places that keep people stimulated beyond the workday. In the UK, the £500 million ($634 million) redevelopment of Birmingham's Smithfield district will create public and commercial space alongside 2,000 new homes.

Crucially, a new street network will be implemented over what was once the site of a large wholesale market.

Cities in Europe have moved towards more closely integrated development since the European Union's signing of the Leipzig Charter in 2007, which aimed to avoid cities separating functions into districts.

The presence of more self-sufficient submarkets, as found in Berlin, can help insulate against job vacancies. While the vacancy rate in Europe was 8.1% in the first quarter, Berlin's rate was only 5.4%.

"The pandemic demonstrated that a separate planning approach around commercial real estate can see disadvantages at different points in the cycle," says Rowden.

"More than ever, cities and developers are now looking to create symbiotic ecosystems of vibrant real estate that generate benefits across multiple uses." (Photo: Freepik)