Our last article covered some trends that needed to be watched in 2018 to keep ahead of the curve and on top of the commercial real estate market. This article is will be covering the increased demand for office space through the growing relevancy of technology in the U.S.
Let’s start off with some statistics. At the beginning of this year there were 200,000 new jobs generated, stalling the unemployment rate at 4.1%, while wages saw one of the largest increases in a long time.
While these statistics may have some positive aspects for most areas, the office space isn’t necessarily one of them. The Bureau of Labor Statistics has stated that January employment increased in the following areas:
- food services
- health care
These areas have very little translation to office spaces and the growth in demand of office spaces. Even if these areas did translate to more desk job involvement, it wouldn’t necessarily mean the traditional office space. As we move forward in the years, there has been an increase in the kind of office space that is desired. Spaces like WeWork would be a good example, a space that is less confined and more socially engaging.
There is a lot of talk about office space absorption hitting the brakes and slowing down this year. Statistics that would support this though would be the estimated 40% decrease in office-using employment growth for 2018. As a result of this decline, we are expecting to see office spaces to be about 32.1 million square feet for the absorption rate, while 2017 boasted 50.1 million square feat.
Now, here is the flip side, there is a sector that is growing, and uses office space. Technology.
The technology sector is known to have been expanding at an increasingly fast rate, about twice the rate of overall job growth, and is responsible for about 20% of the major office-leasing activities in years past.
The technology sector saw around 3,300 jobs gained at the beginning of 2018, while there were more than 104,000 new software and IT service jobs in 2017. The prediction right now is that there will be a 5% global growth in the technology sector in 2018.
Technology is a huge attraction for millennials. Most 18-34 year-old’s have or will be looking for jobs involving technology and will draw them to locations that have a prominent technology presence.
Certainly, 2018 will be a roller-coaster for traditional office space. However it would be wise to center your attention to locations involving technology start-ups and the demographics involving millennials because those places will certainly see a rise in office space demand.
Stay vigilant in your research and keep ahead of the curve!
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