August 12,
2013
Office-using
employment is 93% recovered. So, why the slow absorption?
Andrea Cross
National Office Research Manager | USA
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Office-Using Employment
Latest data, as of July 2013 Sources: Bureau of Labor Statistics,
Colliers International
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Despite a slow recovery in the
office market, growth in office-using employment has outpaced overall employment
growth during the last few years. As of July 2013, the primary office-using
sectors recovered 93% of jobs lost during the recession, compared to an overall
recovery rate of 77% in total employment. When temporary employment (one of the
fastest-growing employment sub-sectors during the last few years) is excluded,
office-using job recovery is roughly 83%--still ahead of the pace of recovery in
total employment. The professional and business services sector has been driving
office-using employment growth, exceeding its pre-recession peak by 535,000 jobs
as of mid-year 2013. However, the financial activities sector has been adding
jobs at a modest rate on a year-over-year basis for more than two years,
recovering nearly one-third of jobs lost during the recession as of July 2013.
The relatively slow recovery in
the national office market, even as office-using employment approaches
pre-recession levels, underscores the impact of more efficient office space
usage by tenants, driven by the following factors:
- Economical: a desire or need for cost savings, such as the GSA's
"Freeze the Footprint" mandate
- Technological: increased
usage of mobile devices (e.g., tablets, smartphones) in lieu of real estate
and human resources; also, usage of workspace monitoring systems to track
desk utilization rates, reducing the number of idle workstations
-
Generational: smaller
footprints as a
byproduct of tenants
such as tech firms
seeking to attract
talented young workers
with denser
collaborative spaces and
more flexible work
arrangements
Today, corporate users are seeking to reduce the average space per
employee to less than
200 square feet, and as
low as 100 square feet
in some cases. Although
the trend of tenant
downsizing will continue
to result in a slower
recovery in national
office market conditions
relative to previous
cycles, further
expansion in
office-using employment
bodes well for moderate
increases in office
absorption and rents in
2013. Office-using
employment is poised to
exceed the pre-recession
peak by year-end, as a
broader economic
recovery bolsters demand
from tenants outside of
the robust ICEE
(intellectual capital,
energy and education)
industries.
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