An article in The New York Times earlier this month posited that after decades of the nation’s large companies staking their futures “far from the fraying downtowns of aging East Coast and Midwestern cities … now, corporate America is moving in the other direction.”
The article — titled “Why Corporate America Is Leaving the Suburbs for the City”— mentioned Chicago, Boston, San Francisco and even Wilmington, Del., pointing to examples such as General Electric, DuPont, Kraft Heinz, Motorola Solutions and McDonald’s Corp.
It suggested the trend is being driven by today’s mostly millennial headquarters employees, who want the energy of living downtown and a desire to work near where they live.
Are we seeing this phenomenon playing out in downtown Louisville? Statistically, the numbers show a promising trend. According to mid-year statistics released by Cushman & Wakefield|Commercial Kentucky, the vacancy rate in Class A buildings downtown dropped to 12.5 percent at the end of the second quarter of 2016. Just three years ago, it exceeded 16 percent.
Anecdotally, there is some of the same interest in downtown Louisville as in other American cities. In the last couple of years:
- MedSynergies Inc., an affiliate of KentuckyOne Health, chose about 28,000 square feet of space in the Brown & Williamson Tower (401 S. Fourth St.) for its new billing service center;
- ComputerShare, a global financial services firm based in Australia, took two floors in Meidinger Tower (462 S. Fourth St.) with plans eventually to occupy three more floors in the building;
- iHealth Solutions, provider of technology and other services for medical records, medical billing and claims processing, relocated from Virginia into the Meidinger Tower, taking about 22,000 square feet;
- The University of Louisville took more than 73,000 square feet in The Nucleus Building (300 E. Market St.) for its Sleep Center and its Research & Innovation facilities;
- Isco Industries, manufacturer of high-density polyethylene piping, relocated its headquarters from the Highlands to 100 Witherspoon St., the Presbyterian Church USA building; and
- Mattingly & Howell, an orthodonture practice, opened a new office on 303 Guthrie St. in the Speed Building. The practice’s four other locations are on Dixie Highway, in the Hurstbourne Parkway/Taylorsville Road area and in Bardstown and Lebanon, Ky. — in other words, all outlying locations, notes Rebecca Matheny, executive director of the Louisville Downtown Partnership.
“This kind of business has become traditionally a suburban-based business, where people live and work,” Matheny points out. “Mattingly & Howell has told us it is targeting a more adult market with its decision to locate downtown, which is an indication that more grown-ups are working and living downtown.”
All that new activity doesn’t include companies relocating within the downtown corridor, like:
- Conifer Health Solutions, which took 52,000 square feet in the Marion E. Taylor Building (312 S. Fourth St.) and 13,000 square feet in the Chase Bank Building (416 W. Jefferson St.) after its space on South Fourth Street — the old KentuckyOne Health complex — was sold for conversion into apartments;
- Mercer, which relocated to 400 W. Market St. (the old Aegon Tower) from the Meidinger Tower;
- Dean Dorton Allen Ford, a CPA firm that relocated from the First Trust Centre to 500 W. Jefferson St.;
- URS, another CPA firm that relocated to 500 W. Jefferson St. from Waterfront Plaza;
- the O’Bryan Brown & Toner law firm, which moved to the Brown & Williamson Tower from the Starks Building when that property was sold for adaptive reuse;
- TQL, the freight brokerage firm, that relocated to Meidinger Tower from First Jefferson Centre; or
- Atria Senior Living, which moved into the Nucleus Center from the Brown & Williamson Tower.
“The significance of all that relocation activity was that it was within downtown, not from downtown to the suburbs, which had been the pattern in Louisville for years,” says Phil Scherer, president of Cushman & Wakefield|Commercial Kentucky.
What about the pattern shifting significantly in the other direction, from the suburbs into the city? “It’s not yet happening,” says Scherer, “but I think it will as companies begin to see the competitive advantages of being downtown in terms of securing top talent.”
Matheny agrees, saying the retention of existing downtown tenants is as much a part of the story as attracting out-of-town companies. “And that story is certainly playing out with companies looking to relocate to Louisville from outside the market. Previously, those companies looked at both downtown and suburban locations. Now, almost every company is entirely uninterested in looking anywhere but downtown.”
Scherer feels the construction of roughly 1,200 rental units in or near downtown will help accelerate the trend by giving talented young professionals residential opportunities closer to where they want to work and play.
Completion of the bridges project also will help, if only to take the chaos and uncertainty out of driving downtown. The traffic flow also will be opened up if the city follows through on plans to turn some of its one-way streets into two-way traffic leading into and out of downtown.
“We’re in the process of completing a downtown mobility plan that takes an aggressive look at converting one-way streets to two ways,” says Matheny. “It will give people more flexibility and more options to drive downtown, which will have an amazing effect on development — especially street-level retail. Studies show that retail does better on two-way streets than on one-way streets.”
She says the conversion is timed to follow the completion of the bridges project.
“How wonderful will it be,” muses Scherer, “when the disruption of the bridges project is over and the renovation of the Convention Center is complete, coinciding with the opening of the new Omni Hotel?”
“One of my favorite quotes, from a downtown Louisville businessman, is ‘The best thing about downtown is that everyone on the sidewalk is a potential client,’ ” says Matheny. “I think that says it all about what’s happening here.”