CBDs need to evolve, but remain most sought-after locations for business headquarters

More discerning occupier needs are driving the re-invention of central business districts, says Cushman & Wakefield’s Cameron Ahrens.

Central business districts (CBDs) have retained their allure as the destination of choice for company headquarters despite the notable transformation in commercial real estate dynamics, a study released by global real estate services firm Cushman & Wakefield showed.

Based on the What Occupiers Want: Global Survey Results 2023, 57% of the respondents selected CBD as the preferred headquarter location – an increase of 9% from last year’s survey.

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But there is also an emerging appeal for city fringes as alternatives for occupiers, especially when cost becomes the primary consideration, said Cameron Ahrens, head of Global Occupier Services for Asia Pacific at Cushman & Wakefield.

In a recent interview with the Singapore Business Review, Ahrens also pointed out that sustainability continues to be a major driver of evolving occupier demands.

“Quality of assets plays a significant role in occupiers’ decision-making process, especially when they aim to achieve their sustainability targets,” said Ahrens, stressing that Grade-A buildings, commonly found in CBDs, often come with green accreditation that aligns with occupiers’ sustainability goals.

Moreover, convenience in terms of transportation and client proximity are significant drivers for occupiers which are inherent in CBD locations.

Amenities and services available in CBD locations also contribute to their allure. “Services available in CBDs play a crucial role in influencing occupiers’ location choices,” said Ahrens.

In this regard, CBDs tend to offer a wide range of facilities such as food and beverage options, gyms, and dry-cleaning services, which appeal to employees and enhance the overall work environment.

Still, Cushman & Wakefield has observed that city fringes are not just a viable option for occupiers, but the growing attraction.

Ahrens explained how occupiers often find considerable cost savings ranging from 20% to 40% when opting for city fringe locations. “City fringes are an option that occupiers consider when looking for cost-effective solutions,” he said.

All things considered, the future performance of CBD markets depends on the ability for continuous transformation and adaptability.

While CBDs are likely to remain relevant, owners of CBD assets must rethink their positioning strategies. Factors such as sustainability, experience, and integration with the community will play a crucial role in attracting occupiers.

“CBDs will have to transform and adapt to the changing needs of occupiers,” Ahrens said, emphasising the importance of understanding individual country markets and their unique requirements.

In conclusion, while CBDs remain a favored choice, city fringes provide attractive cost-saving alternatives. And as the market evolves, CBD owners must focus on sustainability and community integration to maintain their allure to occupiers.