From Joe Sciolla @ CresaPartners via Citybiz:
It’s a case of the incredibly shrinking office, and technology is a prime culprit.
Here’s how it works: As technology increases productivity at the workplace, it also leads to a decreasing need for space. Thanks to automation, we need fewer employees, we use less space per employee, and we outsource more jobs overseas. As a result, with new job growth still limited, class A and B office vacancy rates in most markets continue to be high, and rents continue to be flat.
Indeed, technology, while it generally boosts efficiency and cuts costs, also compromises the commercial real estate recovery. This is bad news for landlords. At the same time, however, it’s good news for tenants since they have added leverage as they look to renew their leases or relocate in a “flight to quality.”