Quote:
Originally Posted by Mr Downtown
I'm not quite so bullish. A lot of the new tech firms are squeezing people in at tables, not even cubicles, much less perimeter offices. Average square footage per worker has been declining steeply over the last decade. So I think the existing stock will absorb a lot of employment growth for a while, with only one new tower every three years or so, financed by churning the big law or accounting firms.
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Part of this has to do with the age of the workforce. The number of "senior" workers at firms is declining and they are usually the ones who demand and want their own office. Meanwhile every space planner's goal seems to be "how many Millenials can I fit in a cubic yard" and they are packing and stacking them in. In fact, most Tenant's are not limited by their ability to pack more people into a space, but by the fact that most Class A office buildings are wary of deals that have more than 5, maybe 6, people per 1,000 square feet of space. Most Landlords do not want the massive overcrowding and resulting wear and tear that accompany's a 6 per 1,000 SF tenant. You have to go to Class B or C space to find someone who will allow it because, frankly, other class A Tenants don't like being located in the same building as a 5 or 6 per 1,000 SF Tenant.
So, to me, the same question in office applies to housing: What happens when the Millenials hit? This generation is facing 30-40% under/unemployment and huge numbers of them are living at home or with a roommate. What happens when they all finally get a good job and want to form their own household? You will see a RE boom. Same goes for the office; what happens when the economy recovers enough that Millenials start getting hired in droves? There is going to be a boom in demand for office space. That raises a further question, the average age of the workforce is dropping, what happens when that starts increasing again and suddenly you have a lot more "senior" workers in the workplace? You are going to see office plan densities drop and the number of SF required to house the workforce increase again. This won't be a return to 1970's style build outs, but it will have a noticeable impact over the next 20-30 years or so on office demand, IMO.