Light at the End of the Tunnel (It’s Not Another Train) — Corporate America Posts First Net Increase in Office Space Absorption in 3 Years

Fresh Signs of Life in Office Market- WSJ

 

Jobs are everything to an economy.  Period.  And perhaps one of the best barometers of Corporate America’s economic mood and outlook is reflected in the total usage of office space.  

 

Good news, as reported in the Wall Street Journal Tuesday January 4, 2011, is that total occupied office space in the U.S. increased in the fourth quarter of 2010 for the first time in three years.  

 

  • Business vacated 137.8 million square feet of office space between January 2008 and September 2010
  • National office vacancy rate is 17.6 percent
  • U.S. absorbed 2.5 million square feet (net) in Q4 2010 after having negative net absorption for 11 consecutive quarters

Based on previous studies (see the references in previous posts Lean, Liquid, Less = Nimble and 

US Govt. Sole Growth Node in US Office Market) that would indicate that each office worker requires from 200 to 250 square feet of space.  In this light, the implication is that the 2.5 million newly-absorbed square feet of office space translates to an estimated 100,000 to 125,000 net new additional jobs.  Since office-related jobs makes up roughly one-in-five jobs, the net implied workforce gain would be from 500,000 to 750,000 new jobs.  Through November, the U.S. had added 951,000 jobs since December 31, 2009.  Of these, however, an estimated 307,000 were temporary workers (see the New York Times article on temporary employment), so the net new job creation was an estimated 644,000 (right in the middle of the estimated job growth implied by office absorption above). Phew—it all checks out!

 

Yep—we are starting to see genuine job growth—but at a very tepid pace.

 

Good news—and no train in this pass.

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