Every business in the world is developing plans for coping with the sudden economic uncertainty caused by the coronavirus pandemic. After staffing cost, real estate is the largest expense for most businesses. Today, every company is looking at ways for reducing that cost.
But people play a critical role in a company’s success and a black swan event like the coronavirus pandemic is a catalyst for employees to reconsider where they choose to live, work, and settle.
Even before the coronavirus pandemic, for both employers and employees, the Bay Area's escalating housing costs, deteriorating quality of life, growing traffic congestion and higher taxes spurred many to move or relocate operations outside of California.
Together with our alliance partners, CroninCRE serves the commercial real estate needs of clients from Northern California through Portland to the Puget Sound so we deal with this issue frequently. Driven by a need to both reduce costs as well as attract and retain a productive pool of talent, companies like Google, Apple, Square, New Relic and many smaller tech companies and startups are joining a growing number of businesses that are moving or expanding to the Pacific Northwest.
Office Rent AND Cost of Living Matters
Average office rents in San Francisco ($70.06/RSF/YR) are more than double rents in Portland ($27.62/RSF/YR) and almost twice Seattle rents ($47.48/RSF/YR). (Source: Costar) Reducing office rent impacts the length of a start-up company’s financial runway and is a major factor when new businesses consider where to start. For established companies looking to expand or contract, rent cost and/or rent reduction along with taxes and incentives are major factors for consideration.
But apartment rent and cost of living matters too. Limited availability and increasing demand have driven up the average one- and two-bedroom apartment rents in San Francisco ($2,469/$3102) while significantly more affordable options are found in Portland ($1,124/$1,326) and Seattle ($1,357/$1,690). (Source: apartmentlist.com)
Home prices offer even greater value in the Pacific Northwest than the Bay Area. The medium sale price of a single-family home in San Francisco is $1,370,900 compared to Seattle $716,900 and Portland $436,100 (Source: Zillow.com).
If talent and money are your company’s fuel for growth, consider the impact of office rent, cost of living and quality of life on your ability to attract and retain talent before you select a location to start or expand your business.