According to a report released by Reis Inc., a shortage in white-collar job growth is hurting the U.S. office space market in the second quarter, resulting in stagnant 17 percent vacancy rate.
Low vacancy rate
U.S. office space vacancy rates have been slowly experiencing difficulty for more than a year, but are still historically high.
Senior economist and associate director of research at Reis Inc., Ryan Severino, said demand for office locations remains stagnant because even as the job market has improved, banks, law companies, and other firms in professional services continue to reduce jobs or postpone hiring.
Jobs needed to improve the office market
Severino said in an interview that the jobs the companies are generating are not the kind that really moves the needle in the office market.
“We’re generating education jobs, healthcare jobs, retail jobs and construction jobs – that’s great, but they’re not the kind of sectors we need to improve the office market,” Severino pointed out.
Companies in tech and energy industry looking for office spaces have been deciding to lease on new buildings, leaving property owners of older buildings.