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Office Sector ‘Extremely Vulnerable’

Leading Ten-X’s list of "buy" markets is Portland, OR, where demand is enough to absorb new office supply even as the city’s job growth is slowing.

Portland, OR skyline Portland, OR is expected to see office rent growth in the 3% range this year.

IRVINE, CA—Despite steady improvement in the national employment picture, and office-using job sectors in particular, office as an asset class is skating on pretty thin ice, Ten-X Commercial says in its latest outlook report on the sector. The report cites little movement in nationwide vacancies over the past two years and rent growth slowing to its most sluggish pace in five years.

In fact, Ten-X says in the just-released US Office Outlook, job growth among office-using sectors has surpassed the pace seen in prior economic expansions—with the tech industry being a notable driver. Yet coinciding with the cycle’s employment gains have been reductions in the amount of square footage per employee, due to technology and workstyle changes that have created a surplus of space.

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Paul Bubny

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.

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