Geography 379: “Urban Growth & Development” Lecture 12: Office Location 1. Types of Office Firms

1. Geography 379: “Urban Growth & Development” Lecture 12: Office Location 1. Types of Office Firms a. Basic Firms b. Supplementary Firms c. Market-Oriented Firms 2. A Useful Locational Analysis Tool: The Population Accessibility Index 3. Locational Considerations for Offices: Advantages of Suburban versus CBD Locations READING Optional: Ibata Project 2: Do Work! “ Americans are over-reachers; over-reaching is the most admirable of the many American excesses.” --George F. Will

2. 1. Types of Office Firms • Long term shift in the sectors of employment in the USA • Manufacturing industries and “blue-collar” jobs have declined • The Service, Government, and FIRE (Finance, Insurance, Real Estate) Sectors and “white-collar” jobs have boomed • Part of historical sectoral job shift: Primary → Secondary → Tertiary → Quaternary • We will examine office firms that exhibit three rather different types of locational preferences • These are called: Basic, Supplementary, and Market-Oriented Firms

3. 1. Types of Office Firms a. Basic Firms • Locate independently of other firms • May choose either CBD or suburban sites • Examples: Corporate HQs, Gov’t Offices, Major Finance Operations • Footloose locational behavior: That means they do not have strong complementary linkageswith other firms • What is important in choosing sites? Prestige and amenities

4. 1. Types of Office Firms b. Supplementary Firms • These firms cluster: around basic and other supplementary firms • Complementary linkages are key to location • Sometimes these are called “Business Services” • Examples: • Data processing • Management services • Accounting • Advertising • Public Relations • Corporate Lawyers

5. 1. Types of Office Firms c. Market-Oriented Firms • These were among the first businesses to decentralize along with residents • Examples: • Personal professional services (e.g., tax accountants, CPAs) • Branch banks • Residential real estate brokers • Travel agencies

6. 1. Types of Office Firms c. Market-Oriented Firms • Locate much like retail activities, seeking out a favorable market area • They are at one point, their potential clients are spread out around the metro area • Kinds of analysis you are using on Project 2 would be useful: Where are competitors? What are the demographics of different sections of town, etc. • Useful quantitative technique for such locational analyses: The Population Accessibility Index

7. 2. A Useful Locational Analysis Tool: The Population Accessibility Index Scenario: You have been elected to Congress and want to open a local office. You seek a convenient location for your constituents to drop by to meet with you and your staff. How could you find a set of good locations? A useful formula:Vj= Σi ( Pi / dij ) Where: Vj= Population Accessibility Index Value for site j j= 1, 2, … m are the sites under consideration i= 1, 2, … n are residential zones of the district Pi = Population of residential zone i dij= Distance from centroid of residential zone i to site j Summation sign: “add up from i = 1 to n”

8. Vj = Σi ( Pi / dij ) Office Site: Centroid of a Census Tract: Census Tract i = 1 Census Tract i = 2 5 V2 =9,200 1 2 V1 =2,450 4 Census Tract i = 3 2 V3 =12,250 1 Census Tract i = 4 2 5 0.5 V4 =12,200 0.5 P1 / d11 + 0.5 V1 = P2 / d21 + P3 / d31+ P4 / d41 ^ V1 = 2,000 / 5 + 3,000 / 4 + 4,000 / 5 + 1,000 / 2 V1 = 400 + 750 + 800 = 1,950 + 500 = 2,450 people / miles people / miles But 1,950 Whazzits? …What are the units of Accessibility? But what’s wrong here? What did we leave out?

9. 3. Locational Considerations for Offices: Advantages of Suburban versus CBD Locations • Accessibility is only one of the locational considerations for office firms • Last time we listed some supposed advantages of the CBD (centrality or overall accessibility to the whole metro area being just one of those) • Let’s now reconsider some of the other items on that list – and consider possible advantages of suburban locations

10. 3. Locational Considerations for Offices: Advantages of Suburban versus CBD Locations Access to diversified labor market Many office firms primarily hire middle class clerical workers. Suburban site: might actually minimize workers’ commuting costs. Boss like to live near her home also!Attraction to higher income suburban neighborhoods Prestige Found with fancy suburban addresses, e.g., Scottsdale Face-to-face Contact This venerable supposed advantage of the CBD is now being rethought! …Many operations don’t require much of it. Even if frequent business meetings are required, does being in the suburbs really means “being out of it”?

11. Consider the Case of the Three-Martini Lunch… Suburban office location: 7:30 AM… Scoot over to the office in 10 minutes The CBD (Many important business contacts located down here!) 11:30 AM… Get into town in half an hour – traffic is light 3:00 PM… Time to head back to the office; in time to beat the rush hour! Ritzy Suburban Office Park Downtown office location: 7:30 – 8:30 AM… 1 hour spent commuting, fighting freeway traffic (and then again during evening rush hour). Boss’s dream home out in the foothills

12. Practice Exam Question Basic office firms are sometimes called “footloose” in their locational behavior because they do not have very strong _________ linkages with other firms. • Auxiliary C. Complementary • Basal D. Draconian