Shrinking Offices Space Leads To Opportunities For Innovation
A new report shows just how dramatically companies are reducing their office footprint in major cities.
More people are working from home or at their local coffee shop. That means there’s plenty of office space in cities collecting dust. It’s not all bad news in the short term for companies tied into leases, though. If they are doing well, the extra space means they can expand without having to rent more office space. Great for the company’s bottom line, not too good for the brokers’.
It’s even worse news for brokers when long-term office leasing statistics are analyzed. Many offices are shrinking faster than an iceberg in the Sahara. City planners and developers are having to think on their feet to accommodate the decreasing office footprint.
According to research by City Observatory, the boom and bust cycle of economies stretching back to 1999 showed most businesses ramped up their square footage per employer in the good times. During the late 2000s, each additional worker resulted in about 125 square feet of space. Over the last decade, that allocation had fallen to just 50 square feet per new employee.
REIS concludes the trend towards less space is a permanent adjustment to new economic realities, which City Observatory believes has a massive impact on how we should think about economic development. As companies become leaner, cities should plan more innovation hubs in an effort to create more industries, such as Sunset Park’s Industry City, which is located in thirty-five acres of former warehouse space on the Brooklyn waterfront.
Just as office space has shrunk, so has retail space as online ordering has delivered a one two punch to commercial leasing. One notable casualty appears to be 124 E. 14th St’s P.C. Richards near Union Square where a city-funded tech hub waits to redevelop and occupy the 15,000 square foot lot which has the capacity for more that 80,000 buildable square feet.
“The opportunity… is just one example of EDC finding creative uses for the assets we have in a city where space is harder and harder to come by,” EDC president President Maria Torres-Springer said in a statement.
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