Office building owners will likely face concerns over vacancy rates and staffing issues in 2013, according to Henry Chamberlain, president of office sector industry group BOMA International.
While more markets are showing signs of recovery, Chamberlain said vacancy rates and asset values will be issues to keep an eye on in the coming year.
He also said some building owners are witnessing their staff members being picked up by other companies.
“There’s a real talent issue that people are dealing with now,” he said during an interview with REIT.com at NAREIT’s headquarters in Washington.
In terms of whether or not cost-cutting strategies during the downturn will be phased out as the economy recovers, such as consolidation of office space, Chamberlain said the sector is seeing a tale of two markets.
“Corporate space users are really looking at downsizing in some ways to drive away cost. But when you look at the multi-tenant marketplace, the 10,000-square-foot tenants, they are really hanging on to that space,” he said.
Chamberlain added that the multi-tenant space users may redesign their offices or do something different to leverage technology and how the teams work together. However, they are still holding onto their office spaces.
“The trend is corporate is definitely reducing office space in big ways. But with the multi-tenant [customers], I think you're going to see a little bit of stability,” he said.
With new development practically at a standstill and not much more expected in 2013, Chamberlain said building owners are taking a closer look at their existing building stock. Many are hoping to refurbish the properties that they already own, rather than buildings new ones.
“There are some really good plans for existing building stock, particularly in the central business districts,” said Chamberlain, adding that this is happening not only in gateway cities, but in market such as Little Rock, Ark.; Des Moines, Iowa; and Denver. “There’s just a lot of good economic activity in those buildings, and they’re repurposing the old ones and then filling in their niches with that,” he said.