Live, work, play? Urban living is driving up the reverse commute
As college-educated talent concentrates in cities, investors and employers should meet them where they live
CHICAGO, July 10, 2018 — We're in the midst of the tightest job market in history, especially when it comes to highly educated talent (bachelor's degree or higher). Having access to that talent is crucial for many companies looking to stay competitive. So where are all these scholarly professionals headed? According to JLL's newest Ambitious Thinking research on Smart Cities called "Live, Work, Play?", the momentum is increasingly within urban centers, but jobs have not necessarily been as fast to follow. And that's drastically increased the number of people enduring the daily slog of a reverse commute.
More than 4.8 million people in the top 25 regions studied by JLL commute from central cities to suburban jobs, with an average reverse commuting rate of 46 percent. Compared to 2011, the number of workers making that reverse commute is up 11.6 percent in major markets overall, including Denver (21.9 percent increase), Phoenix (18.5 percent), San Jose (14.6 percent), and Boston (14.3 percent).
"The 'live, work, play' lifestyle remains an aspiration for many highly-educated Millennials in the market today, despite investment strategies which are being fueled by this mixing of uses. Today's workforce is increasingly opting to live in urban areas, but their jobs may, in fact, be elsewhere," said Jonathan Geanakos, President, JLL Capital Markets, Americas. "As employers catch up to investors, this will continue to present opportunities for urban-centric strategies for more investors in more markets."
JLL's review of the 25 largest U.S. metropolitan areas found that highly educated populations grew faster in major cities (28.7 percent) than they did in surrounding suburbs (23.6 percent) between 2008 and 2016, the latest data available.
"High-quality talent is critical for a company's success, and, for many, it is driving major business decisions including where to locate their offices for the best access to those workers," said Clint Randall, co-author of the report. "In many competitive fields, having an office located where potential employees want to live can make the difference in winning the war for talent."
Not all cities are created equal when it comes to attracting highly educated talent. JLL research shows more than 50 percent of the growth in highly educated population in central cities from 2008-2016 occurred in just six large cities: New York (365,000), Los Angeles (189,000), Chicago (162,000), Houston (119,000), Philadelphia (109,000), and Seattle (93,000).
Philadelphia also took the crown for largest growth rate of highly educated population within the city, with a 56 percent increase during that time period, with other secondary markets rounding up the top performers: Denver (51 percent growth), Miami (47 percent growth), Pittsburgh (45 percent growth), San Jose (42 percent growth), and Portland (40 percent growth).
But despite the momentum of talent moving to the cities, that doesn't mean job growth is limited to urban areas. Employment figures between 2011 and 2015 show jobs growing comparably in cities (8.6 percent) and suburbs (8.4 percent).
Added Lauren Gilchrist, co-author of the report, "While the news is filled with stories of high-profile companies making their way from the suburbs downtown, the reality is much more nuanced. A majority of major cities have actually experienced a slight drop in their share of regional jobs over the past seven years, and that's perpetuating the reverse commute. That's why central business district office and multifamily assets are consistently valued highly by investors: they are well-positioned to capture the momentum of booming downtown workforces."
JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. A Fortune 500 company, JLL helps real estate owners, occupiers and investors achieve their business ambitions. In 2017, JLL had revenue of $7.9 billion; managed 4.6 billion square feet, or 423 million square meters; and completed investment sales, acquisitions and finance transactions of approximately $170 billion. At the end of 2017, JLL had nearly 300 corporate offices, operations in over 80 countries and a global workforce of 82,000. As of December 31, 2017, LaSalle had $58.1 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated.