The Pros and Cons of Locating Your Business in the Suburbs

City life never came cheap. However, in the last few years, prices in cities across the country have skyrocketed to rates never seen before.

What does this mean for your commercial real estate?

As costs surge in metro areas, businesses have been looking for alternatives. What they have found is that the suburbs provide a haven from excessive overhead expenses and unreasonably expensive corporate rent.

suburbs

However, packing up and moving to the ‘burbs may not be for every organization...as what you gain in your budget may be lost in your connectivity. So it is best to be prepared with the pros and cons of locating your business in the suburbs.

How do we know so much about moving to the suburbs? As tenant reps, we protect the interests of our corporate clients in commercial real estate deals. Part of securing the best deal means finding the right geography, so this means keeping up with where the best spots for business are. We have noticed a trend away from business-unfriendly areas like cities to more cost-effective regions. So read on if you want to learn if this opportunity will benefit your organization.

Pros of Locating Your Business in the Suburbs

Fewer Expenses

Higher Quality of Life

Cons of Locating Your Business in the Suburbs

Less Walkability

Less Talent Density

Pros of Locating Your Business in the Suburbs

Corporations aren’t moving away from cities without reason. Let’s examine why so many companies are taking advantage of this opportunity.

Fewer Expenses

Suburbs generally maintain a lower cost of living than cities. As a result, the price of nearly any good or service will be more affordable. For businesses, this means a reduced overhead from cheaper real estate, gas, payroll, etc.

Cheaper Office Rent

Due to the lower cost of living, commercial real estate prices are generally far more affordable in suburban regions. This means that if you do have expensive rent, you are getting more bang for your buck. Even if your rent is not dramatically reduced by moving to the suburbs, your money will go further with:

Better office/ warehouse features
More spacious buildings
Perks like parking
Many more commercial benefits

Likely fewer taxes

When maintaining a business in a city, you are subject to additional corporate taxes, income tax, sales tax, etc.

taxes

These costs quickly add up, significantly increasing your overhead expenditure. Such high taxation rates further feed the higher living costs are more funds are required to live comfortably. As a result, the power of the dollar does not go as far in regions of elevated taxes.

Moving to a suburb will reset these additional costs, leaving you in an advantageous position to save money in multiple areas.

Less Expensive Payroll

Regions of higher living costs demand salaries that reflect elevated prices. For businesses in cities, this means dramatically increased payroll costs. Similarly, since many people commute for work, that additional time, energy, and transport funds must be translated into more desirable salaries.

commute

Businesses can benefit from greatly reduced payroll costs by moving to the suburbs.

Higher Living Quality

Let’s face it. Metropolitan areas are generally more cramped, less clean, and have higher crime rates. People and buildings are densely packed. As a result, more is required to maintain basic infrastructure. Unfortunately, it also increases the likelihood that there will be lapses.

police

For businesses in cities, this means more expensive maintenance and security costs to maintain standards of cleanliness and safety.

On the other hand, locating your business in the suburbs will avoid these concerns. Your employees will also benefit from more elbow room and a higher quality of life. Similarly, there are also fewer safety concerns.

Another serious detriment of city life is the prohibitive expenses owning a vehicle. Even if you can afford gas and car payments, you will find the parking costs of most cities to be more expensive than apartment rent in suburban regions. When living and working in a suburb, you have the flexibility and access of owning your own means of transportation.

Likely Shorter Commutes

Since many workers live in the suburbs, locating your business in these areas will create shorter commutes for your employees. This goes hand in hand with the suburban higher quality of life. For companies wanting to shift back to in-person schedules, shorter commutes can go a long way to incentivize employees to return to the office.

Reducing travel time will also dramatically decrease the carbon footprint of your organization. As cities and towns gradually introduce environmental standards, this is a great way to get ahead of the new green regulations by reducing the overall emissions of your company.

green business standards

Cons of Locating Your Business in the Suburbs

The suburbs may not provide everything that a large-scale organization needs. Let’s look into why you may want to rethink moving your business out of the city.

Less Walkability

Remember how cities are densely packed? Well, for some businesses, this is the main draw of metro areas. They are an epicenter of culture, people, business, and anything else imaginable.

Living in a city provides you access to everything you need within walkable proximity. This means businesses may be able to maintain happier work bases when there is the ease of access to:

Gyms
Grocery stores
Daycare
Shopping and retail
Salons
Entertainment
Many more amenities

city connection

Cities also have more access to public transportation. It is cheaper, more common, and generally easier to take. As a result, If your employee base does live within the city limits, they may have trouble traveling to the suburbs.

Those who want to prioritize public transport and walkable accessibility should prioritize city environments.

Less Density of Talent

Since suburbs are more spacious, you may potentially have fewer options within a smaller radius. Whether this means fewer choices for talent, entertainment, culture, etc.- supply is generally more limited. As a result, it may be more difficult or slower to source the resources you need. However, know that it will depend what you are looking for.

When companies like Google are looking for programmers, they don't open an office in the suburbs. They will search densely populated metro areas that provide more opportunities.

If we consider the rules of supply and demand, this low supply in the suburbs will be reflected in higher prices. This is one of the main reasons that while many suburbs are cheaper as a whole, sometimes they are not much more affordable than the nearby metro areas.

supply and demand

That means if you do find the bests talent or real estate, you likely will have to pay a lot more to competitively maintain them since they are more exclusive.

Is Moving to the Suburbs Right for Your Business?

Being located in the suburbs is associated with both benefits and drawbacks. Depending on your company culture and specialty, a metro office may be necessary. However, for those who can manage a move to the suburbs, you may find a higher quality of living at much more reasonable prices.

If you do believe that a move to the suburbs will benefit your organization but don’t know where to start, you can work with a tenant rep. As real estate experts, they know how and where you should be looking to optimize your CRE portfolio. Whether this means helping you leave your city for a nearby suburb or relocating to a more business-friendly state, your interests will be safeguarded throughout the process.

Even if the suburbs are not for you, a tenant rep is still an invaluable asset. They can assist you from the initial decision that your corporate real estate can be improved to executing your new lease.