There are some indications more office space is being leased. However, the figure could be misleading as more businesses are reducing the square footage leased per employee. In other words, businesses are adjusting themselves to a prolonged sluggish business environment for a foreseeable future.
Studley, a commercial real estate brokerage firm, reported in the 12 months ending on June 30, 2010, office tenants signed 161.3 million square feet in leases nationwide. Studley asserts this figure represents a 5.7% increase over the 12 month period ending in March.
However, the data are not really encouraging for the following reasons:
- Less Square Footage Per Employee: It seems more businesses including large law firms and even federal government are renegotiating their leases or seeking more efficient office space use. This means as a whole, private and public sector are seeking to increase productivity through fewer employees with less overhead.
- Data Are Compared to Some of the Worst Times in Office Leasing: The relative increase in office space is compared to the time when we were experiencing extreme financial straits.
- Uncertainty as to the Direction of Economy: Uncertainty as to whether the economy is improving and whether this improvement is robust and swift enough to create jobs or maintain momentum are keeping businesses on edge and stifling business growth.
In addition, this ominous trend of using less square footage per employee further stifles any rebound in the office leasing sector as there is less demand for office space in the long term. This, inevitably, further complicates any imminent recovery in office leasing.