February 10, 2017
Employment growth has been positive for 27 straight quarters following the (remember?) “jobless recovery.” But according to Reis economists Barbara Denham and Victor Calanog, office space isn’t growing along with the workforce.
Reis figures point to an office occupancy growth of 165 million square feet, translating into a net absorption per added employee of 47. Putting this into context, the average net absorption per employee before the financial crash stood at 125.
Though the conventional wisdom cites “densification” of employees into tighter spaces, and the rise of the remote worker, the Reis economists aren’t buying it. They believe that a lack of negative net absorption during the recession, and too much occupancy growth in the prior expansion are factors.
“Firms were contractually obligated to hold on to their space (during the recession) so they either tried to sublease the space, or they kept as is excess space, often referred to as shadow space . . .” the economists said.
For comments, questions or concerns, please contact Amy Sorter