Four reasons to bridge the urban-suburban divide


Many office tenants are looking for “walkable urban” locations in the suburbs, according to a new report.


Many office tenants are looking for “walkable urban” locations in the suburbs, according to a new report. Such locations are labeled “urban-suburban” by some real estate industry analysts.

The vast majority of US companies want to be in “live-work-play” environments, but not necessarily downtown. (According to a national survey, 87 percent of companies want walkable, mixed-use locations in cities or suburbs).

Suburbs that fail to provide walkable commercial real estate locations will likely find that businesses locate elsewhere. Providing “office parks” is not enough. Here are four important aspects of suburban office markets in the summer of 2017, according to CBRE Group, the largest commercial restate services and investment firm in the world.

Suburban office submarkets with urban characteristics are in the best position to capture occupier demand, and may provide unique opportunities for occupiers to secure space at lower rents and for investors to buy at lower prices in areas that are poised for future growth.

These “urban-suburban” submarkets are characterized by live-work-play dynamics, including higher densities of office space, housing and retail, as well as transportation access and other amenities. Examples of established urban-suburban markets that offer many or all of these attributes include the New Jersey Waterfront, Santa Monica in Los Angeles and Palo Alto in the San Francisco Bay Area.

Occupancy rates and asking rents in emerging urban-suburban submarkets are typically on par with the broader suburban markets in which they are located, while established submarkets tend to outperform. Rents in more than 50 percent of the most established submarkets also exceeded their downtown counterparts.

Net absorption and construction activity have been disproportionately concentrated in urban-suburban submarkets relative to their share of suburban office inventory.