There have been very few major office buildings constructed in the past 7 years, and it is unlikely that many new major ones will be getting built any time soon, other than Hudson Yards and the remainder of World Trade Center in New York, a couple of buildings in Denver, San Francisco, Houston and a few other cities. And it’s because of an interesting conundrum now which inhibits such construction in many places.

Most law firms, accounting firms and banks are reducing floor usage. Other companies are going to open floors and in some cases that reduces floor plate requirements, while sometimes it does not. Many other companies are not fully restaffing after the cutbacks of 2009, and it is unlikely that they ever will. Technology has materially reduced the need for space. Paper files are becoming less of a requirement as the cloud now has become the filing cabinet for many companies and people. In addition, automated phone answering, interactive web and app sites allow customers to conduct certain functions previously done by humans, and it is now well established that it is easy to have spread sheets run over night in India at a fraction of the cost. The one area where staffing is materially increasing is compliance, but these staffers do not need a lot of space per person, and once Obama is out of office, there may be a material reduction is that requirement in all sorts of companies.

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