It looks like 2017 is an interesting year in commercial real estate, especially with regards to workspaces. For some time now, the growing popularity of shared workspaces has reduced the demand for traditional office space around the country. While experts are predicting that the need for office space will reduce thanks to automation and changes in the workplace environment, there are still some places where the office sector is thriving.
Here are some cities where the demand for office space is still high:
1. Oakland, California
It’s no surprise that major cities in the Bay Area have struggled to find space, but Oakland was also affected by another problem – lack of investment. Until recently, many investors didn't see a reason to spend their money on Oakland, but that's expected to change now that Oakland is likely to get the go-ahead for new office space to be developed. While this won’t solve the Bay Area’s land problems, it will create new opportunities on the other side of the Bay Bridge.
2. Manhattan, New York
New York City’s most popular borough has always been the country’s economic hub. Not until recently did the office sector change the way working spaces were designed. In order to attract millennials, now the city’s largest segment of the population, open floor plans, high ceilings, amenities, and outdoor spaces have all become the norm. These adjustments have been met with relative success, as the percentage of TAMI (tech, advertising, media, and information) office spaces have doubled since 2009, now taking up approximately 30% of the borough’s office market and rising.
3. Charleston, South Carolina
Charleston and its surrounding areas are running out of office space and fast. Charleston has long since been famous for its historic downtown area, which has attracted visitors from across the country. Because of this, developers have been focusing more on hospitality and multi-tenant properties, which has left the office sector completely neglected. With the office vacancy rate dropping nearly 10% by the end of 2016, office rates around the area have begun to dramatically increase.
4. Seattle, Washington
Seattle has successfully established itself as a tech hub alternative to the San Francisco Bay Area. This has attracted a lot of businesses, including Google, who recently purchased a 50,000 converted office space and Apple. As Seattle is becoming more of an attractive place to work, more and more businesses are making the city their home. While this has had an excellent impact on the economy, it has driven the demand for office space to new levels as the vacancy rate hovers around 6.5%.
The Future of Office Space in America
It’s incredibly hard to predict what exactly 2017 has in store for the office sector now that they have stronger competition from shared office spaces. With that said, many analysts predict that growth in the tech industry will lead to growth in office markets as well, especially in mid-sized cities like Salt Lake City and Portland.