The reason why tech companies are eschewing suburban campuses for urban office locations.
For as long as many of us can remember, high-tech industries have flourished in the suburban office parks that are so ubiquitous in Silicon Valley, North Carolina’s Research Triangle and other “nerdistans.” But in recent years, high-tech has been taking a decidedly urban turn.
Silicon Valley remains the world’s pre-eminent center of high-tech industry, of course. But even in the Valley, denser, more mixed-use and walkable places, like downtown Palo Alto, are becoming the preferred locations for start-ups and smaller firms. And many other start-ups—Pinterest, Zynga, Yelp, Square and Salesforce.com, to name just a notable few—are taking up residence in downtown San Francisco.
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Venture capital icon Paul Graham notes that, for all its advantages and power, Silicon Valley has a great weakness. The high-tech “paradise” created in the 1950s and 1960s “is now one giant parking lot,” he writes. “San Francisco and Berkeley are great, but they’re 40 miles away. Silicon Valley proper is soul-crushing suburban sprawl. It has fabulous weather, which makes it significantly better than the soul-crushing sprawl of most other American cities. But a competitor that managed to avoid sprawl would have real leverage.”
Still, escaping sprawl is only part of the explanation. There are also the distinct lifestyle advantages of setting up shop in the hurly-burly of real urban districts. Compared with previous generations, today’s younger techies are less interested in owning cars and big houses. They prefer to live in central locations, where they can rent an apartment and use transit or walk or bike to work, and where there are plenty of nearby options for socializing during nonwork hours.
“It’s not that young people wanted to live in Mountain View in the past,” Mr. Suster blogged. “In fact, so many did not that companies like Google & Yahoo had free buses with Wi-Fi from San Francisco to their Palo Alto and Sunnyvale headquarters.”
Or, as one high-tech entrepreneur told the authors of the Centre for London report: “We moved here out of pressure from the [software] developers to move somewhere better. And by better, I think they mean somewhere which has lots of bars and lots of places you can eat.”
This is a Richard Florida article, so if you’re familiar with his body of work then none of this will surprise you. I gather that workers in the energy industry do not have the same prevalent preferences, or at least not enough of them do to discourage this sort of thing. We’re cool, but we’re not quite that cool.
I suspect, but don’t have any proof, that energy company workers tend to stay with the same companies far longer than at tech companies. And when the younger workers get married and have children, they tend to want to live somewhere with good schools that are close to home. And, once the kids arrive, the desire to hang out with friends to eat and drink tends to move from restaurants and bars to home, since few of the cool places are kid friendly, and finding a baby sitter can be difficult.
In Houston, you can move from Midtown to the Heights/Timbergrove area and find a house with a decent yard and better than average schools, but it’s fairly pricy. If you move to the suburbs, you get more house for less money, and, true or not, the thought that the schools are better.
I also think staffing issues are different in the energy industry. A software developer can be at the top of their game right out of school. With petroleum and other engineers, experience counts. This is also true for IT support on massive financial and technical applications. Writing them doesn’t take more than good specifications, while support and implementation are best served by lots of experience. So, energy companies tend to want to retain people who have knowledge. That means locating work areas that are more convenient to the suburban locations where the employees want to live.