As the office market continues to work its way back to full recovery amidst the beginnings of a general economic improvement, office REIT CEOs discussed the key market trends they are monitoring heading into 2013.
For Roger Waesche, president and CEO of Corporate Office Properties Trust (NYSE: OFC), he is seeing an increasing trends toward businesses making do with less.
“The amount of square footage per employee has been reducing, and there are two parts to that,” he said. “One is a cyclical part because the economy has turned down and people want to be more cost conscious. But the second one is more secular where people are just trying to use less office space.”
He said some of that is the younger generation of workers whom feel more comfortable in smaller office spaces and technology has enabled telecommuting and other factors that lead to less necessary square foot per employee.
Waesche added that even if companies are willing to settle for less space, they are still looking for the highest-quality space they can afford.
George “Skip” McKenzie, president and CEO of Washington Real Estate Investment Trust (NYSE: WRE), said among the most important macro trends to monitor will be the increased importance of proximity to mass transportation. He said younger workers want to live and work near mass transportation, particularly in larger urban areas.
Secondly, McKenzie said space efficiency and flexible floor plans will continue to be a major trend among office owners.