Tenants Get Ever More Efficient with Space Needs

WASHINGTON, DC-If the average tenant decreases the square footage it occupies by 10% every time its moves because the new building offers a more efficient use of space, and the average tenant moves every 10 years, what does that add up to? In a word, for landlords at least, trouble—even here in Washington, DC, one of the strongest commercial real estate markets in the country.

To make up the shortfall caused by efficiency, Studley’s EVP David Lipson tells GlobeSt.com, a submarket needs 10% growth to offset the overall 10% decrease in utilization. Studley research director Christian Volney attributes this embrace of efficiency as one of the reasons behind DC’s puzzling occupancy rates. “Last year DC had job growth, but we didn’t have any net absorption,” Volney tells GlobeSt.com. “That is one of the reasons why.”