NYC leasing severely lagging job growth
September 4, 2012
By: Theresa Agovino
The city has been adding jobs faster during this recovery than it did during the bounce backs from the previous two recessions, but despite that, the rate at which office space is being leased is lagging behind that of those earlier economic rebounds, according to a new report by Studley Inc. ...
... John Johnson, a Studley senior managing director, believes the disparity results from two factors. During the last recession, companies failed to shed as much space as they did during earlier downturns, and now they do not need to add space as quickly as they did in earlier recoveries.
"Many clients are having a hard time quantifying what their future space needs will be," Mr. Johnson said.
On top of that, there is a trend in practically all industries towards allotting individual employees less space. Capacious corner offices are more likely to be seen in re-runs of Mad Men on television than in reality. That means companies need less space than they used to.
"Companies are using space more efficiently," Mr. Johnson said.
Mr. Johnson added that even though there was a lot of space put up for sublease during the last recession, many companies held on to space. That's because they remembered having to lease additional office space at much higher rents when they began hiring than what they had sublet excess space for. Since some companies retained their unused space rather than sublet they are just putting their new hires into offices and cubicles that were just sitting vacant.
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