Who are Office Tenants of the Future?
Washington, DC, May 14, 2007 - A new study by the National Assn. of REALTORS® predicts employment related to office-based occupations will rise by 6.5% nationally through 2009 and grow nearly the same amount from 2010-2014.
The study, “Who are Your Future Tenants? Office Employment in the United States: 2004-2014,” demonstrates why the shift to the service sector in the U.S. economy has made the need for office space an important economic indicator.
“Capital flowed into commercial real estate at record levels in 2006, and office properties are one of the most sought-after commercial sectors for investment,” said Paul Bishop, NAR manager of real estate research. “Even so, as employers seek out quality office space and implement space-saving tactics like telecommuting and office hotelling, investors must make smart, informed decisions about target markets and buildings.”
The report identifies total office employment demand for 23 major metropolitan markets. Top office growth markets include New York City; Los Angeles; Chicago; Washington, D.C.; and Philadelphia. The research further compares employment in a particular industry in local markets to the employment percentage of the same industry in the national economy. This comparison helped determine the importance of each industry to local employment and allows investors to focus on cities that have greater numbers of jobs in high-growth sectors.
Health care services are expected to be one of the industries that will drive demand for increased space through 2014. For example, the study shows that health and educational services will play a big role in employment in Baltimore, Cleveland and Pittsburgh.
Nationwide, other sectors which should show big increases in office employment include legal and accounting, architectural and engineering, and computer system design services.
“Commercial real estate now has a beacon to help illuminate the types of office space that will be most in demand in the next decade,” said Cindy Chandler, 2007 REALTORS® Commercial Alliance Committee Chair. “Commercial practitioners will be able to spend their time focusing on prime tenants, such as medical services companies. This kind of research gives practitioners a competitive edge in providing space for the office tenants of the future.”
Chandler noted that this type of research is valuable not only to commercial brokers and property managers, but also to the investment community, to help identify markets with diversified industries and buildings that could be retrofitted for an industry likely to experience future growth.
In addition to identifying broad categories where office demand will grow the most, the study also pinpoints specific segments within each category requiring a proportionally higher amount of office space.
The complete text of the study is available at NAR’s web site.
More than 120,000 NAR members offer commercial services, and 68,000 of those are currently members of the RELATORS® Commercial Alliance, NAR’s commercial division.