WASHINGTON, DC-CBRE's preparing its projections for the second quarter and early indicators suggest it will be a lackluster one, at least for the office space. The culprits include federal budget concerns and a fierce and focused push by companies for space efficiency. The latter, in fact, may account for a strange dichotomy in the DC area: its job creation performance is quite strong. But its office fundamentals? Not so much.
The DC area has created 41,000 jobs over the last 12 months on average, according to CBRE's Jeff Kottmeier. The average for the area is typically 35,000 jobs. In short, the market is creating a lot of jobs but using far less office space to accommodate these workers. The answer is obvious: companies are using space more efficiently and they are using less of it. The real question is, how far can this trend be pushed.
At a certain point, to state the obvious, space needs will have to be accommodated. But work styles and hours are shifting, perhaps permanently, with telecommuting the norm, job sharing and even such structures as four-day work weeks. Also, there is a distinct lack of large federal deals, especially for Downtown, which is tilting DC's numbers, Kottmeier says. "In Downtown I think we will continue to see these trends play out for at least the next twelve months," he says. See more specifics on DC's performance in our next article, DC's Q2 By the Numbers.
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