Two CRE Asset Classes Leading the Way
The impact of open offices on employee collaboration and communication is still being debated.
WASHINGTON—The real estate market continues to remain favorable for commercial real estate services. Though economic growth has decelerated in 2019, there is still a continued momentum, especially in two particular asset classes, according to Cushman & Wakefield.
Office and Coworking
“Our office clients are pursuing location and workplace strategies to attract top talent. Many of our clients are looking for highly amenitized space in mixed-use neighborhoods,” says Steve Quick, Chief Executive of Global Occupier Services at Cushman & Wakefield. “Companies are often looking for ways to cut costs, and since real estate is usually the second biggest expense, it makes sense to evaluate real estate costs. Many employers are analyzing their square feet per employee ratios and ways to reduce that, and one way to do that is to embrace an open office concept.”
While coworking or open offices were initially praised for encouraging employees to interact or have face-to-face conversations, new research, according to Cushman and Wakefield, finds that open offices often times discourages communication. Employees instead email more to ensure privacy plus avoid distracting colleagues and eavesdroppers.
“The impact of open offices on employee collaboration and communication is still being debated. Furthermore, each office and work-style is different and therefore will react to an open office differently, but these impacts should still be considered,” says Quick. “The move to open offices that many companies embraced as a way to control or cut costs are probably here to stay. Therefore, ensuring that the office layout, open or not, works for employees is an important step for all organizations to take.”
Quick sees office space demand continuing to grow. Densification doesn’t seem to have had much effect on the office market, which has enjoyed 35 consecutive quarters of positive absorption.
“With an outlook of continued strong job growth in sectors like technology and financial services, we’re in a well-balanced market for supply and demand,” says Quick.
Industrial
US industrial space demand is likely to continue on its strong pace.
“You can see this in the job growth numbers alone –the addition of 5.7 million industrial jobs over the past nine years, and an anticipated 3.6 million increase in 2019 and 2020,” observes Quick. “Many of our industrial occupier clients are focused on e-commerce strategies such as urban distribution centers for last-mile delivery, which creates opportunities for properties that used to be obsolete.”
Cushman & Wakefield expects 3.6 million newly created jobs in 2019 and 2020 with roughly 680,000 of those concentrated in industrial industries.
Demand remains very strong for well-located Class A assets with access to rail, port, and intermodal services. International port and intermodal access are in high demand and remain the most efficient means of shipping, as logistics and supply chain fundamentals are critical in today’s industrial environment, both from an investor and user perspective, Quick tells GlobeSt.com.
Investors have also signaled that the US markets with the most aggressive industrial pricing are on the coasts and include New Jersey, Southern California, South Florida, and New Jersey. Other high-growth markets include Houston, Dallas, Atlanta, San Francisco, Chicago, and Eastern/Central Pennsylvania.