Sluggish Job Market Stalls Growth in Office Sector?
October 11, 2012
Vacancies in the office market sector remain high, dampened by sluggish growth in employment as well as companies’ more efficient use of office space, Reis Inc. reports.
Office space vacancies fell to 17.1 percent from 17.2 percent in the last quarter, according to Reis, which tracks 79 metro areas.
Companies added office space at a slow pace in the third quarter, and growth over the past year has been only a fraction at what it was between 2008 and 2010.
"It's probably going to take until the middle of this decade before we see more pronounced improvement," Ryan Severino, an economist at Reis, told The Wall Street Journal.
Demand has cooled in many metros not only because of the sluggish job market, but also because tenants seem to be using space more efficiently, according to The Wall Street Journal. More firms are relying on digital storage and realize they don’t need as much office space anymore.
The best performing office markets are mostly centered in the technology sector. The areas that have seen the largest rent growths in the last year in the office sector are San Francisco (up 4.1 percent); New York (up 3.5 percent); San Jose, Calif. (up 2.3 percent); and Houston (up 2.2 percent) and Austin, Texas (up 2.1 percent).
Source: “Office Markets Stagnate on Soft Hiring,” The Wall Street Journal (Oct. 1, 2012)
Updated: August 14, 2020