Urban Core is Still the Region’s Best Location for Office, Retail

Where is the best place in the region to locate if you want to be convenient to the highest number of knowledge workers? You would expect the answer to be Union Centre or Fields Ertel considering the high level of attention given to “growth areas” such as Mason, West Chester and other areas outside of the I-275 loop.

A recent project Cascades Advisory Group completed for a client to find locations within a 10-15 minute drive of college educated, high income earners yielded surprising results. The “hot spot” most convenient to these workers and consumers is centered on the urban core (the broader target area is between I-75 and I-71, stretching roughly from Norwood to the north, down to Newport and Covington to the south).

Why should you care? Location decisions are becoming increasingly more important for companies searching for office space and retailers opening new locations. As fuel prices rise and people desire to spend less time in a car, companies need to be in a good location to attract and retain talent, and likewise, retailers need to be located in areas that are accessible to the highest number of their target customers.

Why do we believe the urban core is the best location for offices and destination retailers? Two main factors lead us to these conclusions - density and road infrastructure. The road infrastructure advantage is probably the most obvious. If you look at a street map of Cincinnati, the urban core and first ring suburbs have a fairly well developed street network, with most major highways meeting in or near downtown. A large population can reach our urban core in 10-15 minutes, while more suburban areas have a less developed street network, which increases the drive time between the many cul-de-sacs and major roads. Because of these differences in road infrastructure, people near the urban core can travel further in a given amount of time (and therefore an urban site can attract more people within a given drive time).

Density is perhaps less obvious, but even more important. Often, people focus on averages, medians and percentages when making location decisions. Median Household Income, Percentage of Households Earning over $50,000, Percentage of Adults with a College Degree, etc. are just a few common metrics used by retailers and companies when selecting a location. Using this type of data can be misleading. For example, if the area around Location A has 50% of households earning over $50,000 and the area around Location B has only 25% of households earning over $50,000, Location A appears to be a better choice (twice as good). But if Location B has 3 times as many households within a 10 minute drive time, then there are more households earning over $50,000 near Location B. Focusing on absolute numbers of target customers / employees is the more accurate way to evaluate locations.

While people often consider total number of households or population, they tend to overlook the total number of target households within a convenient drive time. Companies need to determine all of the factors that make a location successful - competition, target employee / customer profiles, proximity to vendors, etc., as well as market factors (lease rates, available space, land costs and availability). Our analysis and further study convinces us that the urban core is still the best area in the region for most office and retail users. We believe the urban core will become even more attractive as gas prices continue to rise and people work to limit their time spent in a car. Maybe Cascades Advisory Group’s decision to locate downtown on Fountain Square was even smarter than we thought.