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NAIOP Office Space Demand Forecast

New Report by the Research Foundation
Office Space Demand Forecast:
Second Quarter 2016

Key report findings:

  • The national office market is forecast to absorb approximately 34.6 million square feet of space in 2016, down from 62.1 million square feet in 2015, as economic growth flattens in the U.S.
  • GDP growth, which slowed to 0.5 percent in the first quarter of 2016, is forecast to remain low, near 1 to 2 percent annualized growth, with the lower boundary of the GDP forecast dipping into slightly negative territory.
  • The current forecast projects net absorption of office space to regain some strength in 2017, totaling approximately 46.2 million square feet. However, this figure could change, depending on how the economy fares throughout the rest of 2016.

 

Economic Flattening Points to Declining Demand for U.S. Office Space Through 2017 

NAIOP Office Space Demand Graph - 2nd Qtr 2016

The national office market is forecast to absorb approximately 34.6 million square feet of space in 2016, down from 62.1 million square feet in 2015, as economic growth flattens in the U.S., according to Dr. Hany Guirguis, Manhattan College, and Dr. Joshua Harris, University of Central Florida. Gross domestic product (GDP) growth, which slowed to 0.5 percent in the first quarter of 2016, is forecast by the model to remain low, near 1 to 2 percent annualized growth, with the lower boundary of the GDP forecast dipping into slightly negative territory. The current forecast projects net absorption of office space to regain some strength in 2017, totaling approximately 46.2 million square feet. However, this figure could change, depending on how the economy fares throughout the rest of 2016.

“Employment, both overall and in the office-using sectors, had maintained fairly steady growth until the most recent reading for April 2016, which registered only 160,000 net new jobs. This was well below the 200,000 jobs-per month threshold considered the minimum necessary for sustained economic growth,” says Harris.  “We expect the overall declines in macroeconomic output to continue to result in lower employment gains for the rest of 2016.

Read more:  Office Space Demand 2Q16

By: Dr. Joshua Harris, University of Central Florida and Dr. Hany Guirguis, Manhattan College

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