Office Space Sector Job Growth May Slowdown

January 18, 2017

According to the Bureau of Labor Statistics, we have had a drop in unemployment, now 4.6%, and an increase in new job creation numbering between 120,000 to 250,000 jobs every month since June. However, the troubling forecast remains which estimates that in the next six years job positions will become increasingly difficult to fill due to a lack of college educated, skilled workers. While absorption in the office space sector is scheduled to surpass delivery again in 2017, net absorption is expected to decline up to the year 2020. REIS Economist, Barbara Byrne Denham, noted how of the 82 metros which REIS tracks, 15 have now seen office employment declines, and although some metros have outperformed, they too have seen a deceleration in office employment growth. In 2000, there were 2 million working age individuals who entered the job market, in 2016 there were only approximately 900,000, and it is expected that by 2022 that number will decrease to 250,000 new workers entering the job market per year. Walter Page, director of research with CoStar Portfolio Strategy, summarizes this development by saying, “…because we have less bodies coming into the workforce, we can’t sustain as much growth moving forward, and that will cause job growth and net absorption of office space to slow”.

After Years of Steady Job Growth, Office Sector May Be Looking at Slowdown