Urban Pulse or Suburban Ease: Unveiling the Future of Office Location

Hannah Salzberger and Tobias Just

ERES from European Real Estate Society (ERES)

Abstract: The future of office buildings is undergoing a major reassessment as remote working is persistently as well as widely used and cost-benefit analysis reshapes its spatial dynamics. Offices are evolving into spaces for creativity and collaboration, with solitary tasks increasingly completed remotely. While productivity, cost savings and reduced distractions are key benefits, travel time remains the primary driver for working from home. Despite below-average leasing activity in Germany’s top seven cities, the office market is showing signs of stabilizing, with top rents rising. In contrast, office vacancy rates in the US continue to surge, although some cities, such as New York, are experiencing rising property prices and renewed popularity. These trends are influenced by urban structures as well as differences in residential/commercial separation and amenity mix. This research constructs a framework to identify optimal office locations that minimize aggregate travel costs, considering different work modes. First, an analytical model examines commuting costs to central business districts (CBDs) versus peripheral areas, assuming a monocentric city with a denser population near the CBD. Adding satellite offices and amenities evaluates how they affect the attractiveness of centrality. Two working arrangements are examined: team-dependent tasks and independent tasks. Simulations test different team sizes to determine the optimal office location. First, a circular city model is used. Then, in order to minimize total times for different team sizes, real office and residential data is incorporated, with travel times calculated for each office. The methodology uses OpenStreetMap and a KDTree to link residential and office addresses to network nodes, with Dijkstra’s algorithm calculating shortest paths. First, it measures 15- ans well as 30-minute accessibility on foot, by car, or by public transport. Second, it aggregates travel times for randomly selected teams (2-5 people) over 100.000 iterations, highlighting the most frequently selected optimal office locations based on minimum travel time. The initial analysis focuses on Berlin, expanding to Frankfurt before comparing it to New York and Los Angeles to explore the effects of sprawl and centrality. Overall, the results identify the most accessible office locations and explore how urban structures influence accessibility, providing insights into optimal office locations under different working modes. This study contributes to the discourse on the development of office space, focusing on commuting costs and the spatial needs of collaborative and individual work.

Keywords: Office location; Real Travel Time; Team Size; Work-from-home (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2025-01-01
New Economics Papers: this item is included in nep-inv, nep-mac, nep-tre and nep-ure
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Working Paper: Urban Pulse or Suburban Ease: Unveiling the Future of Office Locations (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2025_49

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