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Office: Flattening Demand Ahead

HERNDON, VA—In tandem with slowing GDP growth projected through 2017, the NAIOP Research Foundation forecasts that office-using employment gains will soften “as those sectors feel the impact of less macroeconomic activity.”

By Paul Bubny | paulbubny | Updated on June 17, 2016

NAIOP headquarters in Herndon, VA; the association cautions that office absorption will come in lower in 2016. (Photo courtesy of Metro Offices)

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.

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