City vs Suburbs: Which Is Better For Business?

Last updated:
May 11, 2020
Commercial Real Estate


Daniel Paxton
Daniel Paxton

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The world is changing and every business is considering its next move in this current rental crisis. But, when we're talking city vs suburbs, which is better for business? The bustling, fast-paced, crowded CBD? Or the quieter, more laidback inner suburbs?

Traditionally, the CBD has been the preference for many large, successful corporations. In Melbourne, having a Bourke or Collins Street address is associated with class and prestige. But the past decade has seen a shift in perception, particularly from the younger generations. Now, employees are prioritising accessibility, work-life balance and savings – all of which are found in Melbourne’s fringe suburbs.Over the past 5 years, rents in Melbourne’s fringe suburbs have skyrocketed as a result of increased demand.

Office rents in city-fringe suburbs have increased by more than 50%, vastly exceeding the CBD’s growth of 37%. Inner east suburbs Cremorne and Richmond have experienced rapid population growth, which, when coupled with low vacancy levels, has increased rents by more than 80% since 2015.

Targeting Millennials

More and more businesses are looking to appeal to the ‘up-and-coming’ Millennial generation. Many millennials prioritise location over the perceived ‘status’ of their workplaces. With more young professionals living further away from the city, the choice is simple for many businesses – relocating further out into the ‘burbs is the safest option to attract the best employees.

City vs Suburbs – Which is Better for Business?

However, for many industries, having a central location is key for strong business growth. Being in the city means being at the heart of the action. Global businesses in the legal, finance and engineering industries have strategically located their headquarters at a CBD address. For these companies, the priority is premium facilities, abundant amenity and accessibility for clients, features predominantly found in the city grid.

Smaller, up-and-coming businesses could also benefit from a city-move, receiving increased exposure to the high volumes of people moving throughout the city streets on a day to day basis.

My Experience

Having worked in both CBD and suburban environments, for me there is a stark difference between the two. It takes me 45 minutes to drive to the city, but using public transport increases this over an hour. Working in the suburbs meant shorter travel times and no public transport. However, it also meant less amenity. Being in the CBD means everything you could possibly need is virtually on your doorstep, including great coffee, which some would argue is worth the longer commute!

City vs Suburbs – Which is Better for Business?

All in all, the location needs to reflect the mission and values of the business.

Many Australians think the CBD is the only place to do business is quickly becoming superseded by a newer, fresher take on business strategies. Work-life balance,  achieved by shorter commutes and proximity to lifestyle options, is becoming the priority for many employees and employers alike. And in the current environment, flexibility is key!

Need help figuring out what's better for business - city vs suburbs?

Tenant CS can assist with a needs analysis to help you weigh up your options. Contact Tenant CS today!

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