NEW YORK CITY—As the office sector's recovery becomes broader-based, some markets nonetheless are pulling ahead of the rest. Those markets, says a report from Savills Studley, fall into two camps: those that offer the most specialized talent and those that provide substantially lower costs of doing business. “In many ways, this is a re-emergence of a familiar pattern, the segregation of site selection into knowledge/talent centers and lower-cost back office operations,” the report says.

The clear winners are neighborhoods such as SOMA in San Francisco and Silicon Alley in Manhattan, which have an edge in attracting millennials to urban cores. However, Savills Studley says the suburban corporate campus is “far from dead.” Consider the example of Google: while it has a significant presence in Silicon Alley through its ownership of 111 Eighth Ave., “the mothership is still in Mountain View, CA.”

Many suburban locations have been pursuing high-density development strategies as they compete for employers, development projects and residents, and Savills Studley notes that there have been success stories. “Top employers such as State Farm, ExxonMobil and Charles Schwab are anchoring the next set of 'urban suburbs,' ” according to the firm's third-quarter national office market report. “They are signing massive build-to-suits in mixed-use complexes with extensive new residential and retail product” in areas such as Atlanta's Central Perimeter, the Woodlands in Houston, the Dallas/Fort Worth suburbs in North Texas and Broomfield in Suburban Denver.

In the D/FW suburb of Richardson, for instance, State Farm will eventually have up to 8,000 employees at its 1.5-million-square-foot office campus within KDC's CityLine mixed-use project. “Campuses such as State Farm's will house and train thousands of company employees, many of whom will live, shop and play in the new neighborhoods being built right around their offices,” the report states. In particular, CityLine will have a total of three million square feet of office space, 92,000 square feet of retail, 1,370 residential units and 150 hotel rooms.

D/FW, along with Phoenix, Atlanta and Denver, can lay claim to many of these campuses “because they have something most CBDs lack: a balance between talent and cost,” according to Savills Studley. “All of these markets have a deep and affordable labor pool that is increasingly skilled and educated.”

In Phoenix, for example, nearly 25% of the workforce over 25 has one college degree or more, a higher rate than the 20% of over-25 workers in Los Angeles, and twice that of Las Vegas. At the other end of the cost spectrum, says Savills Studley, are secondary and tertiary markets such as Lexington, KY or Tulsa, OK, which have been luring back-office operations from other markets. “The size of these firms pales in comparison to State Farm or ExxonMobil, but they have a big impact in smaller markets,” the report states.

Now the sixth-largest employer in Lexington, Xerox could become the second-largest after it adds 1,200 positions to a customer service center, notes Savills Studley. In Tulsa, Data Exchange is adding 250 positions. “Areas such as suburban Chicago and New Jersey are still struggling, but as the recovery accelerates there may be enough growth for a variety of markets, not just CBDs.”