HERNDON, VA—As the outlook for GDP growth slackens, the office sector will start feeling the pinch. That sums up a new forecast from the NAIOP Research Foundation, which anticipates a sharp drop in net absorption compared to 2015.
The forecast from Dr. Hany Guirguis, Manhattan College, and Dr. Joshua Harris, University of Central Florida, predicts that the US office market will absorb approximately 34.6 million square feet of space in 2016, down from 62.1 million square feet last year. That's in tandem with GDP growth slowing to 0.5% in the first quarter of this year and projected to achieve no more than 2% annualized growth for the next two years.
Absorption is expected at present to regain some strength in '17, totaling approximately 46.2 million square feet. “However, this figure could change, depending on how the economy fares throughout the rest of 2016,” according to the NAIOP Research report.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
