Brokers Trend of Space Reduction
It is widely believed that when the economy improves, recruitment will speed up and office buildings will fill up rapidly. But is that really so? Today’s real estate brokers tend to disagree.
Brokers believe that newly hired employees in the company would not result in more companies renting offices or buying space for the same. This is because some of the companies will try to fit their employees into a single space, whereas others will just rely upon communications technology to fulfill their space needs.
Robert Ageloff who is the international director at Jones Lang LaSelle stated that businesses often re-evaluate their workspace needs and consider different strategies. As such, an increase in workers by no means implies an increase in office space as well. And in 2013, this goes for almost every office, not just for the one at which he works.
CoreNet and Jones Lang LaSelle have been working in collaboration with each other for the past three years. Both companies believe that instead of increasing space, the density has been increased by as much as 62%.
Ageloff went on to say that though there are several businesses that have launched recruitment campaigns, none of them are using more space. They are all interested in reducing space, and those businesses which are not hiring currently have actually managed to decrease it. After all, the current communications technology utilizes a more open sort of environment where office space is not exactly an issue, since everyone can work from their own homes.
The president of Operations Inc, who is also CEO of the company, has similar thoughts in this regard. The changes in vacancy rate can be accounted to the fact that several companies are choosing to take up lesser amount of space for their offices. As they permit their employees to work from home and other locations, their rents are reduced.
Reducing the space is becoming a prime concern for employers because the rents are ever rising. If a company can reduce office space, the effect is translated into a reduction in the operational costs. This year the average rent in the country has been around $33 per square foot area. The current vacancy rates are 23.4% which is an increase from previous values.
Whether this trend continues or not is yet to be seen, but chances are quite high.
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