HOUSTON—Technology, demand and right-sizing are revolutionizing traditional office from every angle. O.CON: The Office Conference, hosted by GlobeSt.com Thought Leader NAIOP and held June 24-25 Houston, leads the conversation on what's driving the future of office. The inaugural O.CON will showcase creative spaces and retrofits that meet today's demand, and talk about what to do with dinosaur inventory, hear from end-users on space requirements, and talk with developers and investors who are doing the deals.

GlobeSt.com recently spoke with San Francisco-based Al Pontius, national property groups, Marcus & Millichap, who is on the planning committee and also participating in the session "Capital Markets Outlook-A Global Perspective."

GlobeSt.com: What are some of the key office trends you are seeing in the market?

Al Pontius: In the big picture we're seeing gradual improvements in office fundamentals and this has spread to a greater number of markets. This is fueled by the jobs picture and very limited new construction. When you have improvement in jobs and continued low new supply, that's going to have an effect. There is that recognition on the part of the capital markets. The office sector is the late bloomer after the recession. Multifamily and industrial recovered at a faster rate, but now office is emerging.

GlobeSt.com: What about new inventory?

Pontius: We are not adding any new space in any meaningful numbers. In 2015 we will add 55 million square feet of new office and that represents 0.7% of existing stock coming into the year, and this is nationally. It's our biggest number in the past six years and it's still a really low number. Absorption is closer to 110 million square feet, so that's two times the number. And those are attractive numbers from an investment point of view.

GlobeSt.com: So the timing for this conference seems fitting.

Pontius: When you think about NAIOP's timing of the conference, it's perfect. We are now focusing on a sector that was lagging, but is now rapidly growing. It's the right topic for today. This momentum has been building for the last 24 months. There have been more office building sales coming out of the recession each year; there is now a lot of interest.

GlobeSt.com: What is the interest from a global perspective?

Pontius: There is tremendous global interest; we have the strongest economy globally. It's the safest place for investor capital financially and politically. It's a very attractive investment market. Cross border capital is well in hand and office is going to attract that capital. Foreign investors are making asset class decisions, especially today.

GlobeSt.com: What is your take on office investment pre- and post-recession?

Pontius: In 2006 and 2007 we saw a tighter spread in cap rates between primary, secondary and tertiary markets. Today we have a more rational spread, albeit tightening, in yield requirements as you move from primary to secondary and tertiary markets.

GlobeSt.com: What topics will you touch on in your panel discussion?

Pontius: We will talk about why capital is attracted to office; various regions of the country and how they vary in performance; cap rate trends; where we expect office to be within the next cycle and institutional versus private capital.