Here we are in the 15th year of the new century, half a decade out of the major recession, with unemployment at a pre-recession level, gas prices at six-year lows, and retail sales at their strongest in 10 years.
All is good, right? Well, let’s start with a review of some commercial real estate data:
CoStar showed 640 office properties representing over 8.7 million square feet of office space. Within that group, there is over 1.1 million square feet of office space advertised for lease.
From that information, you’ll see an office market with a vacancy rate just north of 10%. Considering the national average is a little less than 20%, with a healthy marketing being in the mid-teens, one could conclude that Frederick’s office market is pretty healthy.
From this chart, it’s easy to see that 158 or 24% of the office properties have a significantly high vacancy rate than the remaining inventory.
Let’s consider how the office workspace has changed. In the past 10 years, the average working environment has dropped from around 220 square feet per employee to less than 175 square feet. That’s roughly a 20% reduction in size.
We see job growth from companies with less than 15 employees. That means the average office requirement is now less than 3,000 square feet. Add to that part-time and telecommuting workers and now the office is closer to 2,000 square feel.
What’s In – Small to midsize, flexible, mult-tenant spaces.
What’s Out – Large, single tenant offices.
This article was originally published in the Spring 2015 edition of the MacRo Report. To download your copy of the current issue of the MacRo Report, click the button below.
Steve Cranford is the Vice President of Sales and Leasing at MacRo, Ltd., a commercial real estate firm in Frederick, MD.