07 Mar Top 10 Office Space Trends of 2016
What does the face of office space in 2016 look like? While most of us won’t be travelling our office’s hallways on moving walkways or scanning our iris to gain access to our office space, we will be seeing a number of changes to the status quo. From the types, quantities, and configurations of office space to what’s on the inside, expect to see interesting advancements and growth when it comes to commercial real estate.
Here are our top 10 trends for office space in 2016.
1. Double-Digit Rental Growth
In its 2015-2016 Global Office Forecast, Cushman & Wakefield projects that major U.S. cities including Boston, Houston, San Francisco, New York, and Seattle will experience double-digit rental growth in 2016. Meanwhile, many other U.S. markets will also see modest increases in office space rents.
2. Proactive Movement
The Cushman & Wakefield report also notes that the lack of quality office space will lead many people to lock in another office space before their current leases expire (and before prices increase too much). This issue of demand outpacing supply helps lead to the aforementioned rise in rent in many cities.
3. Pre-leasing Frenzy
Demand is also outpacing supply when it comes to new construction in several markets. In 2016, we’ll see a lot of pre-leasing happening as people snatch up new offices built in hot locations with high-end materials, the latest technology, and current design trends.
For example, two Class A projects in Chicago totaling 1.6 million square feet were already 50% preleased in November 2014, according to Cushman & Wakefield, despite a projected completion date of 2017.
4. Robust Absorption Levels
In 2016, we will likely see healthy absorption rates, even with new supply. Cushman & Wakefield predicts it will be the lowest office vacancy rate we’ve seen since 2008. Statista.com forecasts that the vacancy rate of office space will fall from 15.6 percent from fourth-quarter 2015 to 14.6 percent in the first-quarter of 2017. It also forecasts a similar pattern for retail and industrial space (dropping from 12.6 to 11 percent and 11.1 to 9.5 percent, respectively, over the same period of time).
5. Sustainable Spaces
“Greener” office space is a hot commodity, with many businesses opting to rent in buildings certified by the Leadership in Energy and Environmental Design (LEED). Around the world, 1.85 million square feet of office space becomes LEED-certified daily. Not only do sustainability efforts like installing LED lighting and window film help conserve energy and lower utility costs, they can also have a positive impact on company image and even employee productivity.
6. Wide Open Spaces
In 2010, it was estimated by the International Facility Management Association that 70% of American employees worked in an open-concept office. That’s not a trend; that’s a way of life. Love them or hate them, open office spaces will prevail in 2016.
7. Executive Suites
Executive suites afford entrepreneurs and small businesses the opportunity to work in an affordable, professional setting while gaining many of the benefits of an open-concept office (through use of common areas and collaborative spaces). Deskmag’s 2016 Coworking Forecast states that 2016 will see more than 10,000 coworking spaces open. In addition, 78% of profitable coworking office spaces planned to expand in 2016, a 12% increase over 2014 numbers.
8. Lifestyle Amenities
It’s no secret we spend a lot of time in our offices. Business owners have taken note of the importance of making innovative office space which are comfortable and convenient, especially to highly courted Millennials searching for “more” out of an employer. Whereas a decade ago amenities only accounted for 3% of a company’s entire portfolio, now it hovers around 10% and includes everything from lounges and coffee bars to wellness centers and outdoor meeting spaces.
9. Home, Sweet Home
In addition to adding lifestyle amenities, business owners will continue to aim for increased employee creativity and morale with residential-style furnishings like plush sofas, natural sunlight, dining room tables, and cozy window treatments. The thinking goes, “Who wouldn’t want to stay here in this comfortable office an extra hour or two?”
10. Bringing the Outside In
According to the Human Spaces Report, workers in an office setting with natural elements like sunlight and plants reported a 15% higher level of well-being, are 6% more productive, and are 15% more creative than their counterparts in offices without natural elements. Unfortunately, about 47% of office employees around the world do not have sunlight and 58% have no plants in their office space. Green walls, indoor plants, and other biophilic design will continue to be incorporated into office spaces in 2016, thanks to their numerous benefits.