At times, offices might seem like they are the read headed stepchildren of commercial real estate. Between flexible floor plans allowing employers to squeeze more workers into existing spaces, technology-enabled alternative work arrangements and a slow rate of growth in office-using jobs, at times it might seem like office buildings are going obsolete.
On the other hand, some of the fastest growing industries in America are heavy office users. While you might not be seeing as many regional sales offices taking up space as in the past, these five industries are likely to drive demand between now and 2022.
Media, Information and Advertising
Whether you're looking at advertising agencies, translators or event planners, communicating and getting together with people is still big business. Moody's predicts that this field will add 665,000 workers over the next seven years while the Department of Labor predicts growth of between 32.7 and 46.1 percent, depending on which subset of the industry you look at. This high rate of growth points to a need for tens of millions of square feet of new commercial real estate space, even at today's reduced space per employee ratios.
Telecommunications
In the third quarter of 2013, 3.3 percent of all of the leases signed in the U.S. were with telecommunications company. Whether or not telephones are obsolete, transmitting data from point to point is more important than it has ever been, and with the increased focus on the cloud and on distributed tasks telecom is in position to continue growing.
Technology
The Department of Labor indicates that occupations in the high tech industry will grow by approximately 10.8 percent between now and 2022, although employment some high demand positions -- like information security analysts -- will grow much faster. Given that some of the most notable commercial real estate development projects underway are already tied to the high tech industry, it's reasonable to expect that growth in the sector could drive demand for office space of 100 million feet or more. Furthermore, this fast-growing sector is already a major office user, consuming 17.8 percent of America's commercial real estate leasing activity, as of the third quarter of 2013.
Financial Services
Banking may be changing and moving away from the traditional branch model, but financial services companies will still need ever-growing office spaces. With 560,000 jobs likely to be added between now and 2020, the finance industry will still need commercial real estate to hold its new talent acquisitions.
Healthcare
While many of the new healthcare jobs being created are in hospitals, medical buildings are another bright spot for owners of office commercial real estate. Along with the growth in demand for doctors, changes in the healthcare industry are spurring demand from other sources. Biotechnology and pharmaceutical companies continue bulking up to serve an aging population that is likely to consume more drugs in the future. At the same time, changes in the nature of care delivery and in payments systems are creating new companies to deal with the alphabet soup of new organizations and regulations that came about due, to a large extent, to the passage of the Affordable Care Act.
