Let’s say you wanted to start a business. And since you live in Chapel Hill, you’d really like to have your office here in Chapel Hill. So you begin the quest for office space.
A couple of creative hotshots you want to hire tell you they want to work where you can walk to lunch or get a craft beer after work. What better place for that than Downtown Chapel Hill, you think! You also love the idea of taking the bus to work, which would be very convenient for you from your home in Chapel Hill. However, your excitement deflates when that accountant in Cary you were hoping to hire points out that she has to pick up her child from preschool. Between the bus transfers if she takes transit, the high cost of parking if she drives, and all the afternoon university traffic either way, it’s simply too hard for her to get in and out of downtown Chapel Hill for her.
Next, you look at some of the suburban office parks out near 15-501 and I-40. They have easy access to the Interstate and transit, plus the trees are nice. However, the buildings are pretty frumpy and the offices inside are dark and dated. Worse, you can’t even walk to anything from there. Forget convincing potential employees that you’re a fun place to work. Where would they even eat lunch?
You’re sharing your woes with a colleague who points out that more companies are moving to large, open floor plans to encourage communication and collaboration. Every available office you’ve seen in Chapel Hill, however, has been kind of cramped and claustrophobic.
Finally, you call a realtor, who shows you the perfect office. It’s in the center of the action. You can drive or take transit. It’s open and airy. And it’s in Durham.
Contrary to popular belief, there are people who want to start businesses in Chapel Hill. And contrary to popular belief, there is office space for rent in Chapel Hill. In fact, about 13% of Chapel Hill’s commercial office space is currently available for your business right now.
The problem is, a significant portion isn’t designed for how today’s businesses work and isn’t in environments where today’s top talent want to work. It’s either not the size most businesses need, not the open layout more of today’s businesses want, it’s too hard for employees outside of Chapel Hill to reach, or it’s in an area that’s not within walking distance of anything.
As Dwight Bassett, economic development officer for Chapel Hill, explained to the Daily Tar Heel this past April, “We are having trouble with spaces under 10,000 square feet and over 50,000 square feet in walkable distances. The vast majority would like to be located [in walkable areas].”
It’s not just new businesses that can’t find suitable office space in Chapel Hill. Quintiles, Rho, Smith Breeden Associates, iContact, Caktus, and Strata Solar are just some of the firms that started in Chapel Hill only to leave Chapel Hill, not because they didn’t want to do business here, but because they couldn’t find adequate office space to expand here. Many of these businesses are now in Durham, taking their taxes with them.
The biggest loss for Chapel Hill is the departure of Blue Cross Blue Shield of North Carolina, the town’s single largest tax-paying employer. BCBS is leaving the iconic rhombus that has been its headquarters since the Nixon administration for University Place in Durham. While the new space at University Place is hardly cutting edge urban design, at least Blue Cross employees can now walk somewhere for lunch.
Our lack of office space that meets the needs of 21st century businesses negatively impacts both our environment and our economy. Almost 65% of working Orange County residents commute to another county for work, up from 55% less than a decade ago, while only 35% both live and work in Orange county. For a community that touts environmental sustainability, sending over 39,000 residents onto I-40 and 15-501 to commute to other counties is hardly exemplary green living.
An even bigger threat our outdated office space poses is to our economic sustainability. While every residential property costs us money, paying about 77-cents in taxes for every $1.00 in services it uses, businesses pay about $4.00 for every $1.00 of services they use. Currently, 87% of Orange County’s tax base comes from residents, while a scant 13% comes from commercial taxpayers.
The most effective way to ensure adequate funding for the community assets we Chapel Hillians cherish is to bring more businesses back to Chapel Hill. That goal starts with making modern office space in attractive, walkable mixed use environments an urgent planning priority.
Help is on the way. Since 2013, Launch Chapel Hill, an incubator for small entrepreneurs, has helped 34 businesses get off the ground. In the next few years, several development projects, including the Glen Lennox redevelopment, will include much needed office space in the kind of mixed-use environments today’s employers are seeking. Over 900,000 square feet of future office space has already been approved by town officials. However, compared to what neighboring communities already offer today, these new offices might not be built and open for business in time to stop Chapel Hill’s tax-paying business exodus.
There’s a reason American Tobacco in Durham is renting space as soon as they can bring it online. There’s also a reason Blue Cross Blue Shield is leaving their iconic building in Chapel Hill. If we’re going to complete for tomorrow’s businesses, we can’t do it with yesterday’s office space.
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