Muoio: u201cLike retail, the office recovery so far has been really tepid.u201d

IRVINE, CA—Technology is causing office footprints to shrink, and yet tech companies are among the country’s strongest office occupiers,‘s senior associate and economist Peter Muoio tells This dichotomy is creating some interesting dynamics in the sector nationwide.

“Like retail, the office recovery so far has been really tepid,” says Muoio. “The good news is that stats for office employment have been getting stronger in the same way that overall employment has been getting stronger. We’re excited to see that growth in temporary services is slowing as more people are being hired on a permanent basis. Also, by our calculations, shadow vacant inventory has now been eliminated. There’s not a whole bunch of empty desks from layoffs, and the sector has been filling that space back up. While we’ve had a lot of office job growth, we haven’t had a lot of office-space absorption because we’ve been back-filling that space.”

With stronger job growth being a trend, job-for-job, absorption should start increasing for office, Muoio predicts, particularly since development has been in check. However, the technology arena is creating havoc with the sector. “The GSA is using much less office space because people are hoteling. Instead of everybody having assigned offices or cubicles, they are given a different desk to go to when they arrive. We’re seeing the amount of office use per person shrinking. People are using the cloud, working from home or wherever they may be. I’m equally efficient in my work whether I’m in my office, a hotel room or at home. I don’t need an office. As more and more people aren’t using them, we’ve moved from an enclosed office to a cubicle to an open-floor layout to an open-desk layout.”

The transformation has occurred because of technology, and yet tech is one of the biggest growers and users of office space, Muoio points out. “They’re also the masters of having people work remotely. One of the fastest-growing segments is the small user, as well as medical-office users as they’re switching from paper records to electronic medical records. They digitized and completely got rid of paper files, so they don’t need that space—medical is well along on that format. The next place is legal—although legal offices love paper, so the degree that this will change is uncertain.”

From PCs to laptops to virtual machines, everything is smaller and needs less space in the office realm, Muoio says. “Technology is shrinking how much space we need for each worker. The cyclical improvement is going on, but we will be using less space as we’re adding workers.”