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Tech companies typically only need an internet connection and electricity. Why do some of them choose to place their offices in a given city center? Office space is more expensive, high density means there is little parking, there is less room to grow as the city center is usually heavily developed.

For other businesses I can see the advantage of having your suppliers close together to reduce logistics costs or being close to the consumer so they are more likely to chose you over competition... but this isn't the case.

Why aren't tech companies around the edges of cities where it is easy to travel too or where employees can live close by so there is no need to commute, office space would also be less expensive as less companies want to move there.

What are the redeeming values that make the relative high costs worth it?

closed as primarily opinion-based by gnat, paparazzo, bharal, Masked Man, Michael Grubey Apr 30 '18 at 7:23

Many good questions generate some degree of opinion based on expert experience, but answers to this question will tend to be almost entirely based on opinions, rather than facts, references, or specific expertise. If this question can be reworded to fit the rules in the help center, please edit the question.

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    You are operating from a false premise. Most tech companies I know operate from the city outskirts for exactly some of the reasons you mention, particularly low rental costs. – Masked Man Apr 28 '18 at 17:12
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    You make some questionable assumptions. It is not typically easier to travel to the edges of the city with regards to public transportation. Most people are not going to sell a house to move close to an office (that can move). A lot of the industrial parks are not places I would want to live by anyway. – paparazzo Apr 28 '18 at 18:32
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    I live in the middle of London and don't own a car. The availability of parking is less important to me than being able to get to work on public transport. – Ben Apr 28 '18 at 19:34
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    A good answer to this will focus on reminding the OP that companies also need people. And can be very picky about which ones. – Nathan Cooper Apr 28 '18 at 19:51
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Some tech companies do establish themselves in downtown areas. Many do not, and here in Austin at least you have clusters of tech companies stretching out from downtown to out in the boonies.

The ones that locate downtown do it primarily for two reasons:

  1. They are looking to recruit the kind of people who like downtown. Younger, urban livers. They believe that being located downtown will be attractive to that kind of techie who likes to live, or otherwise haunt, the downtown areas. Here in Austin, the HomeAway, WPEngine, Atlassian kinds of companies do that (though sometimes costs chase them out eventually). Sure, this then rules out the kind of techies who don't want to hassle with downtown and all that, but when you're hiring in tech it can pay to find a subset and focus on them. It's a continuum - if you want to have your high tech company way out in the sticks, you'll have a harder time hiring because people don't want to have constrained employment options without moving/unacceptably long commutes.

  2. Pure prestige. Your blue-chip tech companies (e.g. Oracle) have a downtown office basically just because they can and they think it looks impressive to clients. They don't tend to have a lot of actual techies in their office though, this is more for account managers and execs. Of course the really big presences just "build it and they will come"; IBM's campus is in north Austin and Dell's is in Round Rock.

Then there's some imports (Google, AWS) that are a mix of the two reasons.

In the end it's a decision specific to a company, much like why you'd choose to live downtown versus in the suburbs - it fits different companies' needs and outlook more or less well for dozens of reasons.

  • Austin is also a cool downtown with a top university in the downtown. You get a lot of students that want to stay there. – paparazzo Apr 28 '18 at 20:05
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The reason why a central location in cities is preferred is

1 Better Transport Links using London as an example you can commute to the central area (basically the circle line) from any where in the south of England put it out on the edge as Ebay has at Richmond (which isn't even on any of the main lines) and your potential pool of recruits is drastically reduced. Also Richmond is super posh and expensive.

2 You are closer to sources of capital.

3 People like working in a centre of a lively city.

4 More controversially on of the past CEOs of BT said "World leading companies don't have a head office in a expletive shed out at Heathrow"

  • "You are closer to sources of capital" why does this matter for tech companies? Thier source of capital is commonly the internet where physical location is irrelevant – user3797758 Apr 28 '18 at 17:05
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    @user3797758 No its not VC's and other sources of capital like to be close to their investments as some one said Sand Hill Road VC's (in the valley) don't like to drive more than a few miles – Neuromancer Apr 28 '18 at 17:08
  • You are right. If location did not matter then why do we have silicon valley. – paparazzo Apr 28 '18 at 20:04

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