Over the last several weeks the GREATER MSP intel team had the opportunity to partner in the design of two really important surveys that seek to unveil sentiment in MSP on the future of work. The first survey is in partnership with Twin Cities Business Magazine on women in the workplace. The intent is to uncover insights on the new and ongoing challenges for women to accelerate in the workplace. New challenges exacerbated by the COVID-19 pandemic are plentiful, from balancing work with distance learning, to corporate prioritization of racial equity. Results of the survey will be discussed at the Women in Leadership Forum, being held on October 12th. We will also be breaking down the results in a future intel blog post.
The second survey is in partnership with Make It. MSP., the talent retention and attraction initiative within the GREATER MSP Partnership. Make It. MSP. is in the process of establishing new 3-year goals for talent retention and attraction, developed under the advisement of an impressive group of regional leaders who make up the Make It. MSP. Leadership Council. As discussed in Peter’s interview this week with Leadership Council representatives, we stand at a major time of transition for talent retention and attraction. The next 3 years will be focused on accelerating recovery of the MSP economy and the ways we support talent and employers of talent will have to look different from how we did it during a time of economic expansion.
The two surveys have a critical connector, a key factor that will be critical as we develop strategies, and that is the relationship between talent and the workplace. Everyone is curious to know what future workplaces will look like. Will headquarters move out of corporate campuses and allow employees to continue to work at home? Will our vibrant urban cores, currently filled with thriving headquarters and professional services firms, need to be redeveloped for new uses? These are the questions emerging here at GREATER MSP, and this week we take a look at a couple different data sets that help to tell the story. Want to weigh in? Take the surveys! The Women in the Workplace survey is found here and the Make It. MSP. survey is found here.
Remote work is on the rise, but not as much in MSP as peer regions.
To get a sense of changing employer hiring practices, the GREATER MSP intel team analyzed monthly job postings data to see how changes have played out in MSP. As we’ve reported in previous blog posts, we track monthly job posting activity using data from our partner Emsi. Emsi allows us to examine unique job postings for the region in comparison to peer regions and across a bunch of factors, including industry, occupation, and location. One factor we are able to examine is job postings that specifically advertise jobs as remote. We know there are a lot of postings that have potential for remote or work from home flexibility and may not necessary be advertised as remote that are missing from this search criteria, but it’s a good high level glance at trends in remote working.
Through our analysis we saw that August job postings for remote positions in MSP were up 71% from pre-COVID-19 February 2020 levels. This increase was much steeper in MSP than in the U.S. overall, where the increase in remote postings was 53%, but smaller than what most of our peer metros experienced (only Denver had a lower increase at 60%). These findings show that metro areas overall experienced a higher increase in remote work opportunities, than other parts of the country, likely because of the higher concentration of office-oriented job opportunities that could easily flex to remote work. The fact that MSP didn’t see as large of an increase as our peer regions is probably more multidimensional, especially during the complexity of economic factors at play over the last few months. Regions seeing the highest increase (Austin, Seattle, Dallas, Atlanta) have been seeing the highest job growth rates over the last couple of years and the increase in remote postings could align with the overall increase in job postings. This is a trend that the intel team will continue to track as the prospect for remote working remains an important talent topic.
Source: Emsi, Unique Job Postings, location advertised as remote
Vacancy high, but office occupancy maintains in MSP
The upticks we’re seeing in remote work could have obvious implications for the commercial real estate market, particularly as we see increases in remote work options for office administrative support occupations like financial clerks and customer service representatives. MSP’s sectors of strength in headquarters, professional services, and financial services and insurance are all heavy office users. As more of these businesses increase flexibility for talent to work remotely there is potential for big swings in office real estate demand throughout the region.
To get a better view of changes in office real estate demand in the region the intel team turned to global real estate firm CBRE for their national office research. We looked at two different time horizons to track change, from Q1 to Q2 2020 and year over year change Q2 2019 to Q2 2020. We specifically were looking for increases in office vacancy to see if office users are downsizing through sublease or altogether not renewing leases. We found that while the vacancy rate is high relative to peers, MSP did not experience an increase in vacancy in either downtown or suburban markets. Instead, the region saw an increase in absorption of office space.
From Q1 2020 to Q2 2020 the MSP downtown vacancy rate decreased 0.6 percentage points from 22% to 21.4%. Two other peer regions saw downtown vacancy rates decrease, Dallas-Fort Worth and Pittsburgh. San Francisco’s downtown vacancy rate had the largest increase of 2.6 percentage points, but still one of the lowest office vacancy rates in the nation. It appears that office tenants in MSP are not jumping out of leases like higher-cost markets are experiencing but taking their time to consider future office needs in this new economic landscape.