By James W. Hughes
Dean, Bloustein School of
Planning and Public Policy
During a single decade (from 1980 to 1990), the New Jersey economy completely reinvented itself. In 1980, we were still a badly aging, urban manufacturing state, hemorrhaging obsolete, blue-collar-industrial-age jobs and physical plant. Remarkably, by 1990, we had become a suburban-dominated, leading-edge, post-industrial, information-age economy, comprising legions of high-wage, middle-skilled knowledge workers. This new white-collar workforce was sheltered in office buildings—the factory floors of the new economy.
These offices were the result of the great 1980s’ office building boom, which completely reinvented the New Jersey economic landscape. By 1990, 80 percent of all the commercial office space ever built in the history of New Jersey had gone up in the 1980s. In 1980, the state was a non-player in the broad multi-state regional office market centered on Manhattan. By 1990, the 11-county northern and central New Jersey market area itself had emerged as the fifth largest metropolitan office market in the country. It was one of the greatest suburban office agglomerations in the United States, much of it located in the state’s auto-dependent, highway-oriented growth corridors.
This was the nation’s cutting-edge growth model at the time, the wave of the future. And it became the Garden State’s core economic specialization—our unique nation-leading spatial competency.
The vacating of Merck’s headquarters (just 21 years old) in Hunterdon’s White House Station in 2014 in favor Union County’s Summit suggests the start of a shrinkage of the outer suburban office footprint. Finding a large singular office tenant to replace Merck is highly unlikely in 21st century New Jersey.
Moreover, New Jersey also specialized in housing middle-skilled, white-collar jobs. Many of the day-to-day tasks of these jobs involved early 1980s’ style information processing and record keeping: routine, segmented, standardized procedures. But advances in information technology that occurred over the past 20 years have redefined knowledge-based work, transforming corporate cultures and the way business actually takes place. Many of the basic work processes that helped define the internal structure of our original office inventory started to disappear. Middle-skilled, white-collar workers were being displaced by sustained advances in information technology as well as by the globalization that the Internet unleashed. The very nature and structure of knowledge-based work was redefined.
Let’s fast forward to the Year 2013. Not only are information technology and emerging business models re-shaping the economic landscape, but we are now experiencing the greatest age structure transformation in history. This is also contributing to changes in where people want to work, as well as changes in workplace spaces themselves.
This transformation is defined by two demographic cohorts: first, aging suburban-saturated baby boomers (born 1946 to 1964) now in their 50s and 60s pursuing empty-nester lifestyles, trying to adapt to cutting-edge technologies, and facing retirement; and second, young echo-boomers (born 1977 to 1995) now in their 20s and early 30s, also known as Gen Y or millennials. They are primarily a rental housing generation, wanting to live in higher-density, non-suburban environments. They are a tech-savvy, socially-interconnected, and collaborative cohort that brings fresh skills to the workplace; but they don’t find suburban employment attractive.
The most talented and highly-skilled are now known as the digerati—people skilled or knowledgeable about digital technologies, especially computers and the Internet—and they have even stronger work and lifestyle preferences. For example, empirical evidence of recent census data suggests that they much prefer edgy Brooklyn and Manhattan to the outer suburbs of Hunterdon, Morris and Somerset counties.
The bottom line is that suburban-centric, auto-dependent office corridors are out of fashion and may have run their course. The legacy of the state’s great 1980s office building boom—comprising at one time a leading-edge, national state-of-the-art inventory—is now an aging and far less competitive portfolio, between 23 and 33 years of age. As the balance of the decade unfolds, the supply of obsolete and underperforming office product is destined to grow. The same reality may confront their campus settings.
Insular, one-dimensional, single-use, corporate campuses may no longer be appropriate to new business models and work processes. Consequently, the 9:00 to 5:00 suburban office silos sunk in seas of asphalt are out. In their stead are exciting, sustainable, interactive, walkable, multifunctional 24-hour environments. Concurrently, the widespread, standardardized, routine, repetitive, white-collar tasks that were housed in our original office inventory of the 1980s have largely disappeared. Today, many businesses depend on innovation and collaboration. And physical space is the biggest lever to encourage this. Consequently, interior office ecosystems are also dramatically changing. The office and cubicle forms inhabited by the baby boom of yesteryear are yielding to the open, flexible, collaborative spaces not only required by this new business model, but also desired by the echo boom of today.
Overarching all of these changes are several other forces that are yielding less office space demand: corporations continually restructuring and reinventing (downsizing) themselves; less space is required per worker within the new collaborative interior environments, and the emerging knowledge-based workforce doesn’t require fixed-in-place information technology systems. Smart phones, tablets, iPads, and vast improvements in wireless broadband speeds have reduced the need for “info-tech” umbilical cords. Workers now have increased mobility. They are no longer prisoners of a limited geographic footprint nor are they cubicle captives. The actual boundaries of the traditional workplace have been redefined and extended to the coffee shop, to the library, and to other public and private spaces. This is significantly lessening actual rental space demand, since it is free elsewhere.
All of this leads to a series of questions. How do we adapt our massive inventory of now geographically-
challenged investments to a changing economic and demographic world? How do we reimagine our core economic competency—the auto-dependent suburban office corridor? How do we transform a sterile office park or campus into a more exciting multifunctional, interactive place? Can it be crafted into ecologies that multiply innovation and creativity, the key office activity of the present and future? Can we create environments attractive to the soon to be dominant echo-boomer workforce?
New Jersey municipalities are now facing this new demographic and economic reality. There increasingly will be more office dinosaurs and white elephants. The vacating of Merck’s headquarters (just 21 years old) in Hunterdon’s White House Station in 2014 in favor Union County’s Summit suggests the start of a shrinkage of the outer suburban office footprint. Finding a large singular office tenant to replace Merck is highly unlikely in 21st century New Jersey. Will the market soon face the following assessment: over-supplied and under-demolished? Perhaps, but the reinvention of the suburban office campus to a new configuration is highly possible.
But it will be different from that of the past. The fiscal imperatives of not doing so will be profound, and conducting business as usual may not be a viable option. Economic bases and ratable assets are at significant risk unless we reimagine and redefine their basic functionality, design and composition. This will not be an uncontroversial task.